Concerns over Syria drive market down
The benchmark S&P/ASX 200 Index was down 35 points, or 0.67 per cent, at 5161.6, while the broader All Ordinaries shed 32.4 points, or 0.62 per cent, to 5156.5.
Lonsec senior client adviser Michael Heffernan said there was a knee-jerk reaction by investors after US political leaders backed President Barack Obama's call for the US to take action over the use of chemical weapons in Syria.
"It may have affected the market," he said. "But if there is a decline should America strike Syria, it will be an event that will be short term as far as its negative effect on the market."
The release of gross domestic product figures had a positive influence on trading, although not enough for the main indices to post gains. "The GDP figures were a bit better than some people had anticipated, although growth was still pretty anaemic over the year as a whole," Mr Heffernan said.
GDP rose 0.6 per cent in the June quarter, for an annual rate of 2.6 per cent - in line with the median market forecast.
Investors were also waiting for Australia's federal election, Mr Heffernan said.
Among the major banks, National Australia Bank lost 32¢ to $32.59, ANZ dropped 28¢ to $29.77, Westpac reversed 32¢ to $31.62 and Commonwealth Bank was 27¢ lower at $73.28. In the resource sector, BHP Billiton dropped 28¢ to $35.54, while Rio Tinto added 50¢ to $61.55.
The spot price of gold was $US1407, up $US16.76.
The dollar was trading near a three-week high as a rise in economic growth convinced traders the central bank could stop cutting interest rates.
Late on Wednesday, the dollar was buying US91.29¢, up from US90.34¢ on Tuesday, and around its highest level since August 16.
Easy Forex senior dealer Francisco Solar said the quarterly GDP figure convinced traders the Reserve Bank could leave rates on hold, only a day after the cash rate was left unchanged.
"The fact that the previous quarter was downgraded to 0.5 means we actually had an uptick in the GDP, so the actual direction took the markets by surprise more so than the number itself," he said.
"In the absence of any more negative news, the market took that as a positive."
Frequently Asked Questions about this Article…
The sharemarket slipped because renewed concerns about a possible US military strike on Syria outweighed encouraging economic data. The S&P/ASX 200 fell 35 points (0.67%) to 5161.6 and the All Ordinaries lost 32.4 points (0.62%) to 5156.5, with investors reacting to the geopolitical risk.
According to Lonsec senior client adviser Michael Heffernan, the market reaction is likely to be a knee‑jerk response and any negative effect from an American strike would probably be short term rather than a lasting decline.
Quarterly GDP rose 0.6% in the June quarter and 2.6% annually, matching median forecasts. That uptick had a positive influence on trading, but it wasn’t strong enough to push the major indices into gains; overall growth was still described as fairly anaemic over the year.
Major banks fell on the day: National Australia Bank lost 32c to $32.59, ANZ dropped 28c to $29.77, Westpac reversed 32c to $31.62, and Commonwealth Bank was 27c lower at $73.28.
In the resource sector BHP Billiton dropped 28c to $35.54, while Rio Tinto rose 50c to $61.55, showing mixed performance within the miners.
Yes. The spot price of gold rose to US$1,407, up US$16.76. The Australian dollar traded near a three‑week high as traders grew more convinced the central bank might stop cutting rates; late on Wednesday it was buying US91.29c, up from US90.34c and around its highest level since August 16.
Easy Forex senior dealer Francisco Solar said the quarterly GDP uptick surprised markets and convinced traders the Reserve Bank could leave rates on hold, especially after the cash rate was left unchanged the previous day. The prior quarter had been downgraded to 0.5%, so the uptick changed market expectations.
Investors were also waiting for Australia’s federal election, which Michael Heffernan noted as another factor that market participants were watching and that could influence trading sentiment.
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