China, French banks take toll on market
THE sharemarket closed more than 1 per cent lower yesterday, with broad-based losses across almost all sectors on speculation China was unlikely to inject capital into debt-ridden European economies.
THE sharemarket closed more than 1 per cent lower yesterday, with broad-based losses across almost all sectors on speculation China was unlikely to inject capital into debt-ridden European economies.The market opened about half a per cent higher, but had shed some of its early gains by noon as cautious investors showed little appetite for shares in an uncertain global market.That was despite a study by the Westpac-Melbourne Institute showing local consumer sentiment had rebounded.Shares then fell after Moody's ratings agency said it had downgraded by one notch top French banks Societe Generale and Credit Agricole while leaving BNP Paribas on negative watch.The benchmark S&P/ASX 200 Index closed down 66.9 points, or 1.6 per cent, at 4005.8.Shaw Stockbroking senior dealer Jamie Spiteri said local shares had fallen in line with other Asian markets and the US futures market on the reports that ratings agency Moody's downgraded European banks because of their exposure to Greece.Chinese Premier Wen Jiabao's promise to increase the country's investment in the euro zone was also tempered, making a bailout seem less likely to investors, Mr Spiteri said."An injection of [Chinese] capital will only come if European countries take the tough decisions in cutting deficits and looking to create jobs rather than just rely on China to bail them out," he said.Macquarie Private Wealth division director Lucinda Chan said lacklustre demand for Italian bonds at an auction on Tuesday was indicative of the mood of the market.In local trade, healthcare stocks took the brunt of the downward trend, losing 3 per cent. The sector was led lower by Cochlear, which was the worst performer on the S&P/ASX 100, losing 14.6 per cent to $51.30, with investors still reeling two days after the company announced it was recalling a range of hearing implants.Financials lost 1.9 per cent, with all the big retail banks falling at the close. Commonwealth Bank shed 2.5 per cent, Westpac lost 2 per cent, National Australia Bank fell 3 per cent and ANZ slumped 1.6 per cent.The telecoms sector rose, led by Telstra, up 2? to $3.02.The best performer on the S&P/ASX 100 Index was iron ore producer Atlas Iron, up 5?, or 1.47 per cent, at $3.46.On the ASX 24, the September share price index futures contract fell 74 points to 4007 points, with 121,402 contracts traded.The closing price of gold in Sydney was at $US1821.79 an ounce, down $US4.82 from Tuesday.