Consolidation the key for investors

THE sharemarket finished slightly weaker yesterday, with investors consolidating gains generated by moves to boost growth in the United States and Europe.

By InvestSMART · 19 Sep 2012

By InvestSMART ·
19 Sep 2012

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THE sharemarket finished slightly weaker yesterday, with investors consolidating gains generated by moves to boost growth in the United States and Europe.

At the close of trade, the benchmark S&P/ASX 200 index was down 7.8 points at 4394.7. The All Ords was down 4 points to 4417.

Shaw Stockbroking senior dealer Jamie Spiteri said the market might need a new catalyst after its recent strong run.

"The market has found a degree of balance or fair value around these levels and at present it is hard to find discounted value out there, now that we've had a recovery in the share prices of major resources stocks," he said.

"We have got the prospects of the likes of banks . . . coming in for some appeal over the next couple of months . . . as major dividend players over the next quarter.

"We've obviously got a situation where the moderating growth of Asia is having its impact in Australia and we need that to be supplemented by some sustainability and recovery in the US and Europe as well."

The standout stock on the local market was Fortescue Metals. The shares surged 51?, or 17 per cent, to $3.50 after the iron ore miner emerged from a trading halt, with news it had secured a $US4.5 billion debt refinancing facility from Credit Suisse and JPMorgan.

Among the banks ANZ and Commonwealth were unchanged, National Australia Bank added 8? to $25.56 and Westpac lost 7? to finish at $24.35.

Coalminer New Hope was up 37? at $4.55 after it said it was reviewing the pace at which it was developing new projects because of falling coal prices and the strong dollar.

Elsewhere in the resource sector, BHP Billiton was down 19? at $33.96 and Rio Tinto slipped 25? to $57.25.

Among other stocks, internet service provider TPG added 7? to $2.14 after it lifted its full-year profit by 16 per cent as it continued to increase its broadband and mobile customer numbers.

Building products supplier and takeover target Alesco was 0.5? higher at $1.905 as it said it expected its first-half profit to be well ahead of that in the previous corresponding period.

The dollar was two-thirds of a US cent lower after weak performances on Asian sharemarkets.

Late yesterday the Aussie was trading at US104.56?, down from US105.24? on Monday.

Commonwealth Bank currency strategist Peter Dragicevich said the dollar had been drifting lower since its six-month high of US106.25? late last week.

The spot price of gold in Sydney also closed lower, at $US1757.94 an ounce, down $US12.01 on its Monday close. AAP

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Frequently Asked Questions about this Article…

Why did the ASX sharemarket finish slightly weaker and what does consolidation mean for investors?

The article says the sharemarket finished a little weaker as investors consolidated gains after recent moves to boost growth in the United States and Europe. ‘Consolidation’ here means the market has found a degree of balance or fair value around current levels, so there may be fewer obvious bargains and investors could be waiting for a new catalyst before pushing prices significantly higher.

What were the closing levels of the S&P/ASX 200 and All Ordinaries mentioned in the report?

At the close of trade the benchmark S&P/ASX 200 was reported at 4,394.7 (down 7.8 points) and the All Ordinaries was at 4,417 (down 4 points), according to the article.

Which stocks stood out on the day and why should investors take note?

Fortescue Metals was the standout after its shares jumped to $3.50 following news of a major debt refinancing. Other notable movers: New Hope gained after announcing a review of the pace of new projects, BHP Billiton and Rio Tinto slipped, TPG lifted its share price after improving full‑year profit, Alesco rose while expecting stronger first‑half profits and being a takeover target, and major banks showed mixed moves. These shifts highlight how corporate news and commodity pressures can quickly affect share prices.

What was the Fortescue Metals refinancing announcement and who provided the facility?

Fortescue disclosed it had secured a US$4.5 billion debt refinancing facility provided by Credit Suisse and JPMorgan, a move that followed a trading halt and coincided with a sharp rise in its share price.

What did the article say about bank stocks and their appeal to dividend-seeking investors?

Shaw Stockbroking senior dealer Jamie Spiteri noted that banks could become more appealing over the coming months as major dividend players, suggesting investors may look to bank stocks for income as the next quarter approaches.

Why is coalminer New Hope reviewing the pace of its new projects?

New Hope said it was reviewing how quickly it develops new projects because of falling coal prices and the impact of a strong Australian dollar, both of which can affect project economics and returns.

How did currency moves and the gold price feature in the article?

The Australian dollar eased by about two‑thirds of a US cent after weak Asian markets, trading at roughly US104.56¢ (down from US105.24¢). Commonwealth Bank strategist Peter Dragicevich noted the dollar had been drifting lower since a recent six‑month high. The spot price of gold in Sydney closed lower at US$1,757.94 an ounce, down US$12.01 on the previous close.

What corporate updates did TPG and Alesco report that investors should know?

TPG lifted its full‑year profit by 16% as it continued to grow broadband and mobile customer numbers, and its shares rose to about $2.14. Alesco, identified as a takeover target, said it expects first‑half profit to be well ahead of the prior corresponding period and traded around $1.905.