Concerns over Syria drive market down
The sharemarket lost ground on Wednesday as renewed concerns about a possible US military strike on Syria outweighed encouraging figures on economic growth.
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."