Falling iron ore price hurts big miners
THE sharemarket slipped backwards yesterday, with the big miners losing ground after another fall in the iron ore price and continuing weakness in commodity markets.
THE sharemarket slipped backwards yesterday, with the big miners losing ground after another fall in the iron ore price and continuing weakness in commodity markets.Financial stocks also eased after the Reserve Bank warned that higher funding costs and subdued credit growth could dampen the profits of the country's big banks.Defensive stocks performed well, with the consumer discretionary, IT, and telecoms sectors gaining ground, but not enough to counter falls in the materials and energy sectors.The benchmark S&P/ASX 200 Index lost 12.6 points, or 0.3 per cent, to 4372.9.IG Markets strategist Stan Shamu said high-yielding stocks such as banks had been helping to support the market until the release of a twice-yearly Financial Stability Review by the RBA.The review suggested that conditions would get a lot tougher for Australia's banks, but it hoped that they would not take on riskier loans to try to sustain their profits.NAB analyst David De Garis said the report also showed that the asset performance of Australia's banks had improved a little over the past six months, but the aggregate non-performing loan ratio was still higher than before the crisis."Banks' bad and doubtful debt charges have declined more substantially from the peak of the crisis, but now appear to have troughed," Mr De Garis wrote in a note to clients."Along with higher funding costs and lower credit growth, this has contributed to slower profits growth. [So] the RBA again has warned against the risk of banks easing lending standards in the 'pursuit of unrealistic profit expectations'," he said.NAB shares climbed 8? to $25.58, CBA rose 23? to $55.31, ANZ lost 14? to $24.56, and Westpac slipped 4? to $24.54.Among the big miners, Rio Tinto lost $1, or 1.8 per cent, to $53.97, while BHP Billiton shed 16? to $33.25 and Fortescue gave up 8?, more than 2 per cent, to $3.52.Australia's largest goldminer, Newcrest, fell 37? to $27.77, and oil and gas producer Woodside Petroleum fell 35? to $33.65.Telstra moved up 2? to $3.88 and health stock ResMed closed 8? higher at $3.84.The spot price of gold in Sydney finished at $US1764.36 an ounce, up $US4.27.Meanwhile, the dollar closed higher as the market continued to speculate about a rate cut at the Reserve Bank's October board meeting. At the Australian close, it was trading at US104.26?, up from US104.13.National turnover was 1.4 billion securities worth $3.59 billion, with 394 stocks up, 526 down and 344 unchanged. AAP