Australia Market Wrap
G20 Summit a Fizzer for Australian shares
The G20 Summit and US market set the tone for a poor opening for Australian shares, in tandem with news that the Japanese economy had officially tipped into recession and flat Australian retail sales for the September quarter.
The benchmark S&P/ASX200 Index ended the day down 2.5%, or 95.1 points, to 3653 points.
In Asian markets, the Nikkei Index opened down more than 1.5 per cent after it was announced that the country had fallen into recession.
Even a takeover offer for Coca-Cola Amatil (ASX:CCL) could not revive the market. CCL had the biggest gain after receiving a $7.6 billion takeover bid from Lion Nathan (ASX:LNN). Coca-Cola was up more than 16 per cent at $9.62 after describing the bid as insufficient.
National Australia Bank (ASX:NAB) was trading at an 11-year low, down $1.25 or 6.32 per cent to $18.54. NAB recovered slightly late in the session.
Asciano Group (ASX: AIO) registered the biggest fall among the 200 biggest companies, dropping nearly 17 per cent $1.29 after JP Morgan downgraded its earnings forecast for the port and rail group.
Banks down on more bad loan worries
ANZ Bank (ASX:ANZ) was down 50 cents, or 3.6%, to $13.28, Commonwealth Bank (ASX:CBA) fell $1.01, or 3.1%, to $31.09, NAB (ASX:NAB) was also down $1.01, or 5.1%, to $18.784, Westpac (ASX:WBC) lost 46 cents, or 2.7%, to $16.34 and St George (ASX:SGB) was down 79 cents, or 1.4%, to $22.41.
Macquarie Bank (ASX:MQG), as down $2.16, or 9.5%, to $20.57 and Babcock & Brown (ASX:BNB) lost 7.5 cents, or 15.6%, to 40.5 cents.
Miners lose ground
BHP Billiton (ASX:BHP) was down 96 cents, or 3.6%, to $25.44 on worries BHP would have to reschedule $500 million in iron ore sales to China, Rio Tinto (ASX:RIO) was down 38 cents, or 0.5%, to $71.62, Oz Metals (ASX:OZL) dropped 5.5 cents, or 6.2%, to 83 cents, Fortescue Metals (ASX:FMG) was down 7 cents, or 3.7%, to $1.83.
Gold and oil listless
Woodside Petroleum (ASX:WPL) had lost 76 cents, or 2.1%, to $36.14 and Santos (ASX:STO) was down 18 cents, or 1.3%, to $13.32. Gold stocks were mixed, with Newcrest Mining (ASX:NCM) was up 6 cents, or 0.3%, to $21.10 and Lihir (ASX:LGL) was down 9.5 cents, or 5%, to $1.78.5.
Retail sales flat
The volume of inflation-adjusted retail sales rose 0.1 per cent to $53.104 billion for the September quarter in seasonally adjusted terms compared with analyst expectations for an increase of 0.4 per cent, figures from the Australian Bureau of Statistics showed today.
Retail sales fell a revised 0.2 per cent in the June quarter and 0.1 per cent in the March quarter. New South Wales was the biggest drag, falling 1.8 per cent for the third consecutive quarterly decline.
NAB Capital chief economist Rob Henderson said the latest data was “very weak” and supported the case for further interest rate cuts. “It’s telling us there’s a big hole in consumption in the third quarter,” said Mr Henderson.
Consumers have been reigning in spending recent months amid signs the economy is heading for a sharp slowdown.
Market factoring in big chance of rate cut in December
The Reserve Bank has responded to sluggish spending and other bleak economic data by cutting interest rates by 2 percentage points in the past three months.
The market is pricing in a 96 per cent chance for a 100 basis point cut at the RBA’s December 3 meeting.
A cut of that magnitude would reduce the cost of borrowing to 4.25 per cent, the lowest level since the aftermath of the September 2001 terrorist attacks.
Other Australia Market Wrap articles
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06/01/09 Australian shares buoyed by rally in small miners
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05/01/09 Aussie shares pulled back by banks
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22/12/08 Holidays and lack of leads pulls market lower
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19/12/08 Bargain hunters scoop up Aussie banks
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18/12/08 Australian shares recover – but still catching the CBA disease
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17/12/08 Aussie shares gain, but feel CBA’s pain
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16/12/08 Local stocks fall, but off lows
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15/12/08 Aussie miners lift market on US auto bailout optimism
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12/12/08 Local shares follow fortunes of US auto bail-out
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11/12/08 Australian bourse’s no leads day
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15/12/08 Centro in trading halt, talks with bankers
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05/12/08 Australian car dealers - in $2b bail-out by Big Four banks
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03/12/08 Metal prices fall more than during Great Depression
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02/12/08 RBA slashes cash rate by 1%
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28/11/08 iCash releases CashPod ATM for Australia/NZ markets at AGM
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27/11/08 BHP Billiton leads the market higher
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