MOODY'S downgrades of its debt ratings for Italy, Spain and Portugal combined with a fall in commodity prices to drag the sharemarket down almost 1 per cent yesterday.
The slide wiped out the S&P/ASX 200 Index's Monday gain of 39.8 points, taking it down 42.3 points, or 0.99 per cent, to 4242.8.
All sectors finished lower as investors digested the impact of the downgrades, which included cuts for Slovenia, Slovakia and Malta.
Moody's also placed negative outlooks on France, Britain and Austria, and said Europe's weakening economic prospects threatened the implementation of domestic austerity programs and structural reforms needed for greater competitiveness.
"Those jitters from Moody's comments trickled through our market in the absence of any large, significant, industrials reporting today," said City Index chief market analyst Peter Esho.
"That was enough to see stocks down."
Copper and gold prices fell, and low natural gas prices dragged BHP Billiton lower.
"[The price of gas] continues to slump, and so that's weighing on the price of BHP," Mr Esho said. The stock closed down 49?, or
1.3 per cent, at $36.17, while Rio Tinto fell $1.15 or 1.6 per cent to $69.28.
Oil majors slipped more than 1 per cent, with Woodside Petroleum losing 41?, or 1.2 per cent, to $35.17.
Gold major Newcrest Mining dropped 70?, or 2 per cent, to $34.40.
The spot gold price was down $US10.60 at $US1717.25 an ounce at the close of the Australian session.
Banks and financials stocks were also softer on the eve of the release of Commonwealth Bank's first-half result today.
The market expects CBA to post interim cash earnings of $3.529 billion, roughly flat on its most recent second-half result.
CBA shares lost 33?, or
0.7 per cent, to $49.96 while Westpac led the sector lower and closed down 25?, or
1.2 per cent, at $20.90.
Bright spots were contained to News Corp, which gained 19? to $18.84, and consumer staple Woolworths, which put on 28?, or 1.1 per cent, to $24.99. Coca-Cola Amatil firmed 13? to $11.73.
Building fixtures supplier GWA Group posted a 60 per cent drop in first-half profit, which sent the stock down 17?, or 6.9 per cent, to $2.31.
Tabcorp Holdings fell 15?, or 5.2 per cent, to $2.75 after the wagering and gaming company announced it hoped to raise about
$200 million by issuing new subordinated notes to be listed on the Australian Securities Exchange.
Frequently Asked Questions about this Article…
Why did the ASX 200 fall nearly 1% on the trading day covered in the article?
The S&P/ASX 200 fell 42.3 points, or 0.99%, to 4,242.8 after Moody's downgraded debt ratings for Italy, Spain and Portugal (and cut several smaller European sovereigns) while commodity prices — including copper, gold and natural gas — also slipped, wiping out the index's earlier gain.
How did Moody's downgrades and outlooks for Europe affect Australian sharemarkets?
Moody's cuts and negative outlooks for some European countries (and negative outlooks placed on France, Britain and Austria) dented investor sentiment, leading to broad sector weakness across the ASX as markets digested the potential for weaker European growth and slower implementation of reforms.
What impact did commodity price moves have on major miners like BHP and Rio Tinto?
Falling commodity prices hit resource stocks: BHP was weighed down by a slump in natural gas and closed down about 1.3% at $36.17, while Rio Tinto fell $1.15 (1.6%) to $69.28, as copper and gold prices also retreated.
How did oil and gas companies perform, and what drove their share price moves?
Oil majors slipped more than 1% on the day; for example Woodside Petroleum lost about 1.2% to $35.17, with broader weakness in energy and commodity markets contributing to the declines.
Why were banks and financials softer, and what was the market expecting from Commonwealth Bank (CBA)?
Banks eased ahead of CBA's first-half result — the market was expecting interim cash earnings of about $3.529 billion (roughly flat versus the most recent half). CBA shares fell 0.7% to $49.96 and Westpac led the sector lower, closing down about 1.2% at $20.90.
Which stocks were bright spots on the day despite the market slide?
A few consumer and media names bucked the trend: News Corp gained about 1% to $18.84, Woolworths rose roughly 1.1% to $24.99, and Coca‑Cola Amatil firmed about 1% to $11.73.
What company-specific news moved smaller stocks like GWA Group and Tabcorp?
GWA Group reported a 60% drop in first‑half profit, sending its stock down about 6.9% to $2.31, while Tabcorp fell around 5.2% to $2.75 after announcing plans to try to raise about $200 million by issuing new subordinated notes to be listed on the ASX.
As an everyday investor, what market signals from the article should I monitor next?
Watch commodity price trends (natural gas, copper and gold) and any follow‑up to Moody's European outlooks, plus corporate updates such as CBA's upcoming first‑half result — these were the main drivers of sentiment and share‑price moves described in the article.
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