Fiscal deal failure reverses gains
For the week, the benchmark S&P/ASX200 rose 40.5 points, or 0.8 per cent, at 4623.6 points, while the broader All Ordinaries rose 40.2 points, or 0.8 per cent, at 4635.2.
The local bourse performed strongly since Monday, and had charged higher again on Friday morning.
It rallied to a fresh 17-month high of 4658.7 points on Friday on anticipation that US leaders would strike a "fiscal cliff" deal before Christmas, thereby allowing the country to function properly next year.
But by midday on Friday it emerged that the Republican Party was no longer going to support its own deal - which included a suggestion that taxes rise only for those with an annual income of $1m or more - and the S&P futures dropped 2 per cent in the blink of an eye, to 1391 (March contract), with global risk assets tumbling.
The ASX200 was knocked sideways, dropping nearly 50 points from its daily high, to end the day 10.5 points lower overall.
Commonwealth Bank strategist Phillip Brown said the events were a major setback, and the bond market rallied accordingly.
"The US 10-year Treasury rallied about 5 basis points on the news. Australian rates have fallen about 3 basis points in sympathy with the US move," Mr Brown said. "We are loathe to speculate about what will happen from here, but an 'over the cliff' scenario is becoming more and more likely as time passes."
In a note to clients, IG Markets analyst Shan Stamu wrote: "It is clearly all about the fiscal cliff at the moment. With House Republican leaders seeming quite far apart on the proposal and only meeting again after Christmas, fears that we are still far from a deal have become apparent."
In other news, the New York Stock Exchange was bought by a little-known rival - the 12-year old IntercontinentalExchange, based in Atlanta - for $US8.2 billion ($7.8 billion). See full story on right.
It comes after the ASX was forced to abandon its multi-billion merger with the Singapore Exchange last year, after the federal government said it was not in the national interest.
For the week, ANZ Bank rose 30¢, or 1.2 per cent, to $24.95, after representatives from the bank predicted local and global economic conditions would remain soft in 2013, and political uncertainty would add to concerns.
Billabong slipped 11¢, or 11.8 per cent, to 82.5¢. The surfwear retailer's share price plummeted on Thursday after it slashed its earnings forecast and announced it was considering its fifth - and lowest - takeover offer in 10 months.
Commonwealth Bank rose 34¢, or 0.5 per cent, to $62. The bank is taking control of John Symond's Aussie Home Loans, increasing its stake to 80 per cent and extending its position as the country's number one home lender.
Qantas rose 6.5¢, or 4.7 per cent, to $1.46, after the competition watchdog approved plans by the airline to more closely integrate its operations with that of its low-cost airline Jetstar.
Telstra Corp rose 9¢, or 2.1 per cent, to $4.34, after the competition watchdog said the telco's proposed acquisition of the smaller Adam Internet would reduce competition in phone and internet services.
Whitehaven Coal rose 26¢, or 8.2 per cent, to $3.44, after it finalised a $1.2 billion debt facility that shored up funding for its flagship Maules Creek coal project.
Frequently Asked Questions about this Article…
The article says Australian shares finished nearly 1% higher for the week, but they were volatile after US House Republican leaders walked away from a Plan B compromise. The S&P/ASX200 rallied to a 17‑month high on hopes of a deal, then fell sharply when S&P futures tumbled about 2%, knocking the ASX200 down nearly 50 points from its daily high and leaving it 10.5 points lower for the day.
According to the article, the benchmark S&P/ASX200 rose 40.5 points (0.8%) to 4,623.6 points for the week, while the broader All Ordinaries gained 40.2 points (0.8%) to 4,635.2.
The article reports that the US 10‑year Treasury rallied about 5 basis points (yields fell) after the breakdown in talks, and Australian rates fell roughly 3 basis points in sympathy, indicating a bond‑market rally as investors sought safer assets.
Per the article, ANZ rose about 30¢ (1.2%) to $24.95 after the bank predicted local and global conditions would remain soft in 2013 and flagged political uncertainty. Commonwealth Bank rose about 34¢ (0.5%) to $62 and is taking control of John Symond's Aussie Home Loans, increasing its stake to 80%.
The article states Billabong slipped 11¢ (11.8%) to 82.5¢ after the company cut its earnings forecast and revealed it was considering its fifth — and lowest — takeover offer in 10 months, triggering the sharp share price drop.
Qantas rose 6.5¢ (4.7%) to $1.46 after the competition watchdog approved plans for closer integration between Qantas and its low‑cost carrier Jetstar. Telstra rose 9¢ (2.1%) to $4.34 after the competition watchdog said Telstra's proposed purchase of smaller Adam Internet would reduce competition in phone and internet services, as reported in the article.
Whitehaven Coal rose 26¢ (8.2%) to $3.44 after finalising a $1.2 billion debt facility that the article says shored up funding for its flagship Maules Creek coal project.
The article reports that IntercontinentalExchange, a 12‑year‑old Atlanta‑based company, bought the New York Stock Exchange for about US$8.2 billion. The story notes this in the context of the ASX having been forced last year to abandon a multi‑billion dollar merger with the Singapore Exchange after the Australian government said it was not in the national interest.
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