Dollar loses ground as global slowdown fears rise
FEARS about a slowdown in global economic growth spilled over into currency markets yesterday, the Australian dollar slipping against its major trading peers as large falls in mining and energy stocks weighed heavily on the sharemarket.
FEARS about a slowdown in global economic growth spilled over into currency markets yesterday, the Australian dollar slipping against its major trading peers as large falls in mining and energy stocks weighed heavily on the sharemarket.The S&P/ASX 200 Index fell 50.7 points, or 1.2 per cent, to 4139.8. The broader All Ordinaries Index fell 52 points, or 1.2 per cent, to 4197.8.The local bourse has lost 4.2 per cent in value since December 5, when it sat at 4139.79 points.Yesterday it finished in the red for the third straight day amid concerns about Europe's inability to deal with its liquidity and solvency problems and as industrial production in the euro zone proved weaker than expected.Economists warned Europe could be heading into recession and the dollar slipped to $US0.9885, down from $US0.9910 the previous day. At close of trade, the euro was $US1.2981 against the greenback, down from $US1.2983.Despite business conditions in China beating expectations - the Chinese manufacturing purchasing managers' index hit a two-month high - the news failed to outweigh concerns about Europe.The Australian dollar lost ground against the euro, slipping to ?0.7608 from ?0.7633."The Australian dollar has been underperforming the euro in periods of high volatility throughout this crisis and now that we've morphed into a concern about growth and European sovereigns it makes more sense," a senior currency strategist at National Australia Bank, Emma Lawson, said.BHP Billiton fell 64? (or 1.79 per cent) to $35.06 and Rio Tinto fell $1.76 (or 2.79 per cent) to $61.40, while Fortescue Metals was 16? lower (or 3.41 per cent) at $4.54.Among the materials, the gold stocks were some of the worst performers, Newcrest Mining losing 93? (or 2.92 per cent) to $30.88. Energy stocks also fell, led by Woodside Petroleum, which slipped 53? (or 1.68 per cent), to $31.10.In more gloom for the retail sector, JB Hi-Fi issued a profit downgrade after the market closed. The firm said in a note to the ASX it expects earnings before interest and tax for the half year 2012 to be around 5 per cent below its first half last year. Before the warning, the electronics and entertainment retailer had lost 24? (1.57 per cent), to $15.