Asian slide leads local stocks lower
Despite small gains in early trade, Australian shares closed about 0.3 per cent lower as the Shanghai Composite, Japan's Nikkei and Hong Kong's Hang Seng indices moved into the red.
The benchmark S&P/ASX 200 dropped 13.1 points (0.28 per cent) to 4656. The broader All Ordinaries shed 17.6 points (0.38 per cent) to 4633.5.
CMC Markets sales trader Betty Lam said the Chinese markets had been "brought to their knees".
China was facing a liquidity crisis, she said, with a need for the nation's central bank to intervene to curb shadow banking, with non-banking financial bodies competing against commercial banks for traditional services.
She said China's problems, combined with last week's signalled windback of bond buying in the US, were still being felt.
"Traders have sold the Chinese indices into bear territory; fears of a Chinese credit crunch have sent a ripple effect across Asian markets," Ms Lam said. "China's story has placed downward pressure on the miners and energy-based stocks, both weighing down local equities heavily.
"Consumer staples are doing the heavy lifting for the Australian market as we see traders take flight from material-based stocks."
BHP Billiton was down 54 cents to $30.81 and Rio Tinto lost $1.30 to $50.24.
Among the banks, ANZ was flat at $27.38, CBA up 38¢ to $66.12, NAB 2¢ to $28.70 and Westpac 15¢ to $27.70.
Coles owner Wesfarmers added 57¢ to $38.60 and Woolworths 10¢ to $31.85.
Shares in Goodman Fielder gained 3.5¢ to 74.5¢ after it renegotiated its private-label bread contract with Coles.
Goldminer Newcrest's shares continued to fall as it brought in a former chairman of the corporate regulator to review its disclosure practices. Newcrest closed 23¢ (2.4 per cent) lower to $9.40.
The Australian dollar rose back above 92 US cents as investors shrugged off concerns about the Chinese central bank tightening credit rules.
At 5pm on Tuesday the dollar was trading at US92.55¢, up from US91.67¢ on Monday. The currency's dive below US92¢ was its first in almost three years.
Frequently Asked Questions about this Article…
Australian shares closed about 0.3% lower after nervous investors took their lead from falls in major Asian markets (Shanghai Composite, Japan's Nikkei and Hong Kong's Hang Seng). The benchmark S&P/ASX 200 dropped 13.1 points (0.28%) to 4,656 and the All Ordinaries fell 17.6 points (0.38%) to 4,633.5.
Fears of a Chinese liquidity and credit crunch put downward pressure on miners and energy stocks. The article notes traders sold Chinese indices into bear territory, which rippled across Asian markets and weighed heavily on local miners — for example BHP Billiton fell 54¢ to $30.81 and Rio Tinto lost $1.30 to $50.24.
Consumer staples provided the bulk of support as investors moved away from material-based stocks. Examples include Wesfarmers (Coles owner) rising 57¢ to $38.60 and Woolworths up 10¢ to $31.85. Goodman Fielder also gained after renegotiating a private‑label bread contract with Coles.
Major banks were relatively stable with modest moves: ANZ was flat at $27.38, Commonwealth Bank (CBA) rose 38¢ to $66.12, NAB added 2¢ to $28.70 and Westpac gained 15¢ to $27.70.
The Australian dollar rebounded above 92 US cents as investors largely shrugged off worries about the Chinese central bank tightening credit rules. At 5pm Tuesday the AUD was trading at US 92.55¢, up from US 91.67¢ on Monday — after its recent dip below US 92¢ was the first in almost three years.
Yes. Goodman Fielder gained after renegotiating a private‑label bread deal with Coles (shares up 3.5¢ to 74.5¢). Goldminer Newcrest continued to fall after appointing a former chairman of the corporate regulator to review its disclosure practices, closing 23¢ (2.4%) lower to $9.40.
The S&P/ASX 200 dropped about 0.28% (13.1 points to 4,656) and the broader All Ordinaries fell about 0.38% (17.6 points to 4,633.5). The moves followed declines in major Asian indices including the Shanghai Composite, Nikkei and Hang Seng.
Investors should monitor developments in Chinese markets and any central bank actions addressing liquidity or shadow banking, signals from US bond‑buying policy, ongoing performance in miners and energy names, consumer staples resilience, and movements in the Australian dollar — all factors highlighted as driving market sentiment in the article.
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