Fears over Greece keep market down

AUSTRALIAN stocks closed lower with investors' caution about the weekend's Greek elections overriding positive offshore leads.

By InvestSMART · 14 Jun 2012

By InvestSMART ·
14 Jun 2012

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AUSTRALIAN stocks closed lower with investors' caution about the weekend's Greek elections overriding positive offshore leads.

At the close of trade yesterday, the benchmark S&P/ASX200 index was down 9.1 points, or 0.2 per cent, at 4063.8. The broader All Ordinaries index was down 6.8 points, or 0.2 per cent, to 4111.5.

On the ASX 24, the June share price index futures contract was 18 points lower, or 0.44 per cent, at 4066 with 31,169 contracts traded.

While the market had opened higher, it had quickly taken a U-turn at 11am and traded lower for the rest of the day, a CMC Markets sales trader, Miguel Audencial, said.

That caution included uncertainty among investors, with some closing out long positions in the event of a leftist Greek victory, balanced by others with short positions second-guessing that there might be relief for risk assets.

"The reasons for the rally in the US overnight were not based on economic fundamentals, they were based on speculation about further stimulus from the US," he said.

"That's not really a good foundation if you want to start a rally. That's why the sell-off was quite quick."

In local economic news yesterday, the Westpac/Melbourne Institute Survey of Consumer Sentiment was up 0.3 per cent at 95.6 index points for June.

Meanwhile, shares in Whitehaven Coal rose after the miner said the billionaire Nathan Tinkler had made a privatisation offer.

Whitehaven shares were 18?, or 4.5 per cent, higher at $4.18.

Investment firm Macquarie Group also announced it had bought a 5 per cent stake in the casinos operator Echo Entertainment Group.

Shares in Echo last traded at $4.49 before going into a halt, while Macquarie Group was one of the heaviest losers on the ASX50, down 51? to $25.80.

The big mining companies were mixed. BHP Billiton closed up 20? at $31.92 and Rio Tinto clawed back early losses to be down only 5? cents at $54.60. Fortescue Metals was the standout on the ASX50, closing 2.86 per cent stronger at $4.68. Computershare was next best, rising 2.36 per cent to $7.82 after maintaining guidance despite a tough environment in Europe.

The four major banks were all weaker.

ANZ was down 20? to $21.57, National Australia Bank was 7? lower at $22.15, Commonwealth Bank was 20? lower at $50.62 and Westpac fell 8? to $20.49.

National turnover was 1.5 billion securities, worth $3.5 billion, with 411 up, 564 down and 365 unchanged.

Offshore markets on Wednesday are expected to be affected by the sale of 10-year German bonds and the release of US retail figures.

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Frequently Asked Questions about this Article…

Why did the ASX200 close lower despite positive offshore leads?

Australian stocks fell because investor caution about the weekend's Greek elections outweighed positive offshore leads. The S&P/ASX200 closed down 9.1 points (0.2%) at 4,063.8 as traders closed or adjusted positions ahead of political uncertainty.

How did the Greek elections and US stimulus talk affect market sentiment?

The prospect of a leftist victory in Greece made some investors close long positions while others with shorts wondered if political outcomes might boost risk assets. Separately, a US overnight rally was attributed to speculation about further US stimulus rather than economic fundamentals, which one trader said made the rally fragile and encouraged a quick sell-off.

What happened to ASX futures and trading volumes during the session?

On the ASX24 the June share price futures contract was 18 points lower (around 0.44%) at 4,066, with 31,169 contracts traded. National turnover for the day was about 1.5 billion securities worth $3.5 billion, with 411 stocks up, 564 down and 365 unchanged.

What notable company moves should everyday investors know about from the article?

Key moves included Whitehaven Coal shares rising about 4.5% to $4.18 after a privatisation offer from Nathan Tinkler, and Macquarie Group buying a 5% stake in Echo Entertainment Group — Echo last traded at $4.49 before a trading halt. Macquarie itself closed lower at $25.80 and was among the heavier fallers on the ASX50.

How did the major miners perform and what were the notable price levels?

Mining stocks were mixed: BHP Billiton closed higher at $31.92, Rio Tinto ended slightly lower at $54.60 after clawing back early losses, and Fortescue Metals was the standout on the ASX50, closing 2.86% stronger at $4.68.

What was the performance of the big four banks and what does that mean for bank investors?

All four major banks were weaker that day — ANZ closed at $21.57, National Australia Bank at $22.15, Commonwealth Bank at $50.62 and Westpac at $20.49 — reflecting broad caution in the market. For bank investors, this signalled sector-wide pressure rather than company-specific news in many cases.

Did any non-mining, non-bank stocks stand out in the trading day?

Yes — Computershare rose 2.36% to $7.82 after maintaining its guidance despite challenging conditions in Europe, showing that companies with stable outlooks can attract buying even in risk-off sessions.

What offshore events were expected to influence markets after the session?

Markets were expected to be influenced by the sale of 10‑year German bonds and the release of US retail figures, both of which can affect global risk sentiment and bond yields that feed back into equity market moves.