Dollar slides, investors flee under Europe's dark cloud
Marketwatchers were kept on edge this week by political news from Europe, where French and Greek voters took a left-turn towards parties that opposed the region's harsh austerity policies.
Marketwatchers were kept on edge this week by political news from Europe, where French and Greek voters took a left-turn towards parties that opposed the region's harsh austerity policies.By late yesterday, after poor Chinese industrial production data, the gloomy mood had pulled the Australian dollar towards parity with the greenback, the lowest it had been since December last year.Currency strategists said the dollar would likely slip below parity overnight, as fears about the political situation in Greece continued to weigh on global markets.For the week, the benchmark S&P/ASX200 index shed 113.4 points points, or 2.6 per cent, to 4282.6. The broader All Ordinaries index dropped 116.7 points, or 2.6 per cent, to 4342.7.The ASX suffered its biggest one-day fall for the year on Monday, down 2.15 per cent, when investors responded to weak United States employment data, and elections in France and Greece.Trading yesterday started weaker after JPMorgan Chase admitted it had lost $2 billion in the past six weeks by trading derivatives in a "flawed" hedging operation. The company's stock fell almost 7 per cent in after-hours trading in the US.Among the local banks, ANZ was 11? lower at $22.04 after it became the last of the big four to pass on some of the Reserve Bank's interest rate cut.National Australia Bank dipped 2? to $24.55, Westpac shed 18? at $22.72, and the Commonwealth Bank dropped 10? to $51.80.Further unsettling news from the eurozone stirred fears of global growth, which in turn hit local resource and energy stocks.BHP Billiton slipped 25? to $34.37, and Rio Tinto fell 87? to $61.07.Despite the gloomy mood, some fund managers welcomed the pessimism, because they had been able to buy quality stocks at a discount price."I've never seen the average investor as negative as he is now, which I think is a very good thing," the executive director at Allan Gray Australia, Simon Marais, said."Once all the money's out of the market it can only come back in ... when everybody's gloomy and nobody is interested in the market, that's normally where the actual risk is pretty low."Among other stocks, law firm Slater & Gordon was 3? lighter at $1.75 after it said it would book a $10 million writedown after the High Court decided not to grant its client leave to appeal a Federal Court ruling in the Vioxx action.Trans-Tasman casino operator SkyCity Entertainment sagged 12? to $2.90 after it downgraded its profit expectations following weaker trading conditions, especially in Adelaide.Garage doors and construction products supplier Alesco eased 1? to $2.06 after it again urged its shareholders to take no action on the $188 million takeover offer from Dulux.