Global woes keep market lower

The local bourse lost ground for the third-straight day yesterday, compounding a rough couple of weeks for shareholders, as traders remained anxious about the fate of Greece and the prospects for Chinese growth.

By InvestSMART · 26 May 2012

By InvestSMART ·
26 May 2012

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For the week, the benchmark S&P/ASX200 index lost 16.6 points, or 0.4 per cent, at 4029.8, while the All Ordinaries fell 17.64 points, or 0.4 per cent, at 4081.2.

Europe has caught up with Australia this month: so far the ASX200 has lost more than 360 points, or 8.2 per cent the Australian dollar has fallen about US6.65? in three weeks.

Investors will now be waiting to see how European and US markets round off their week.

After two days of falls on the local sharemarket, things started positively yesterday after Mario Monti, Italy's Prime Minister, said Greece would likely stay in the eurozone. His comments tipped Wall Street into positive territory.

But by midday things turned south on the local market after reports China's biggest banks might miss their loan targets for the first time in seven years.

Resource stocks struggled, with heavyweight BHP Billiton falling 38?, or 1.2 per cent, to $31.61, and Rio Tinto declining 43? to $55.93.

The endless uncertainty about global markets saw financial stocks slip backwards, with the major banks all closing down. Westpac was the worst performer, shedding 27?, or 1.32 per cent, to $20.12.

"The fear of fallout from Greece - [investors] are connecting that with banks and everything else," Stuart Smith, senior client adviser at Bell Potter Securities, said. "The market is now pitching to the retail investor to keep their money in the bank by virtue of the yield."

For the week, Myer shares were down 18?, at $1.97, after the retailer said it would offer discounts of up to 60 per cent this winter, forcing shareholders to cringe but bargain hunters to celebrate.

Qantas rose 2.5? to $1.45 after the airline said it would boost the number of its east coast flights, providing almost 900,000 more seats a year.

BHP gained 15? to $31.61 for the week, even though more than 3000 coalminers have started a week-long strike in Queensland's Bowen Basin as an 18-month dispute over working conditions rolls on.

James Hardie climbed 31? to $7.36 after posting an improved full-year profit due to a favourable ruling in a lengthy tax dispute.

Elders shares slipped half a cent to 20?, despite returning to profitability with first-half earnings of $40.5 million.

Iluka Resources climbed 62? to $12.80, despite backing away from earlier pledges to increase dividends. The mineral sands miners still forecast a decent increase in earnings this year.

Orica shares slipped 16?, to $25.03. The chemicals company is part of a joint venture that will build a $815 million ammonium nitrate plant on the Burrup Peninsula in the Pilbara region.

PMP gained 1.5? to 38.5?. The printer and publishers have now added more than 10 per cent in value after the company confirmed ticketing and labelling group TMA was behind a recent takeover bid.

Fairfax shares slipped 1.5? to an all-time low at 62.5?.

ALL ORDS AUSTRALIA

HIGH 4173.4

LOW 4081.2

4081.2

-17.6 (0.4%)

SOURCE: BLOOMBERG

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Frequently Asked Questions about this Article…

Why did the ASX200 and All Ordinaries fall this week?

The article says global worries knocked markets lower — investors were anxious about the fate of Greece and the prospects for Chinese growth. For the week the S&P/ASX200 lost 16.6 points (about 0.4%) to 4029.8, while the All Ordinaries fell about 17.64 points (0.4%) to 4081.2. The report also notes the ASX200 has lost more than 360 points (around 8.2%) over three weeks.

How are concerns about Greece and China affecting everyday investors on the ASX?

According to the article, uncertainty around Greece and slowing Chinese growth is making traders nervous, which pushes investors toward safer income options and pressures share prices. Stuart Smith of Bell Potter Securities is quoted saying investors are connecting Greek fallout to banks and other sectors, and that the market is pitching retail investors to keep money in the bank by virtue of the yield.

What happened to major resource stocks like BHP Billiton and Rio Tinto?

Resource stocks struggled during the session. The article reports heavyweight BHP Billiton fell about 1.2% to $31.61 during the trading day, and Rio Tinto declined to $55.93. The piece also notes industrial disruptions such as a week-long strike by more than 3,000 coalminers in Queensland’s Bowen Basin, which is a relevant headwind for miners.

Why did bank stocks slip and which bank was the weakest performer?

Financial stocks fell back as global uncertainty fed concerns about fallout from Europe. The article says major banks closed down and Westpac was the worst performer, shedding around 1.32% to $20.12. Market commentary linked the Greece situation to a broader risk-off mood that hit bank shares.

How did retailers and airlines fare — what happened with Myer and Qantas?

Retailer Myer saw a marked share drop (to $1.97) after saying it would offer discounts of up to 60% this winter, which pushed shareholder nerves but may please bargain hunters. Airline Qantas rose about 2.5% to $1.45 after announcing it will boost east-coast flights, providing almost 900,000 more seats a year.

Which companies reported company-specific positive news that investors should note?

The article highlights several company-specific items: James Hardie climbed after reporting an improved full-year profit aided by a favourable tax ruling; Iluka Resources rose to $12.80 while still forecasting a decent earnings increase this year despite backing away from earlier dividend pledges; Elders returned to profitability with first-half earnings of $40.5 million (though its shares slipped); PMP gained after confirming ticketing and labelling group TMA was behind a takeover bid; and Orica is part of a joint venture building an $815 million ammonium nitrate plant in the Pilbara.

Should dividend changes be top of mind for investors after this market update?

The article flags dividend-related news: Iluka Resources backed away from earlier pledges to increase dividends but still forecasts a decent rise in earnings. That suggests investors should watch company guidance and dividend statements closely, as firms may revise payout plans in a volatile market.

What market events should everyday investors watch next after this week’s movements?

Investors in the article were waiting to see how European and US markets would finish the week. Key items to watch based on the report are developments on Greece, Chinese growth and loan targets, major bank updates, ongoing industrial actions (like the Queensland coal strike), and company earnings or guidance that can move individual shares.