Index slips on renewed debt-crisis fears

STOCKS yesterday added to Thursday's losses in slow trading, on resurfacing fears over Europe's debt crisis.

By InvestSMART · 7 Jan 2012

By InvestSMART ·
7 Jan 2012

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STOCKS yesterday added to Thursday's losses in slow trading, on resurfacing fears over Europe's debt crisis.

The S&P/ASX 200 Index finished down 34.2 points, or 0.8 per cent, at 4108.5 just above the low of the day. Almost three shares fell for each one that rose.

However, the benchmark index managed to gain 1.3 per cent for the week, snapping a four-week losing streak, after stronger economic data from the US and Europe encouraged investors early in the week.

But the optimism wore off on the realisation that Europe's debt problems were likely to persist.

On Thursday night, European markets closed lower and the euro tumbled after a rise in borrowing costs at France's latest government debt auction sparked concerns over the health of the region's second-largest economy.

"There are the usual concerns about the European banking and debt situation," said EL & C Baillieu Stockbroking director Richard Morrow. "The reflection of all that is equities are pretty soft."

Mr Morrow said investors would be looking to US aluminium company Alcoa's results, due for release last night Australian time, to get the first glimpse of how the materials sector was going.

Also due out last night were the US non-farm payroll figures, which could set the tone for markets early next week.

Materials stocks pushed lower after a selloff in commodities overnight. BHP Billiton shed 1.6 per cent to $35.24 while Rio Tinto lost 0.5 per cent to $62.52.

Goldminers were among the stocks that bucked the trend as gold continued to climb. Newcrest firmed 25?, or 0.8 per cent, to $30.75. At the close of Australian trading, spot gold was up $US5.90 at $US1625.15 an ounce.

Suncorp led financial stocks lower, dropping 28?, or 3.2 per cent, to $8.42. Other general insurers also fell, IAG losing 2.3 per cent to $2.93 and QBE 0.2 per cent to $13.12.

The big banks declined, with ANZ the hardest hit, finishing 1.4 per cent lower at $20.45.

Goodman Fielder was the biggest loser, falling 3?, or 7.1 per cent, to 39.5?. Qantas gave up 6?, or 3.9 per cent, to $1.465.

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Frequently Asked Questions about this Article…

Why did the S&P/ASX 200 slip on the day and how much did it fall?

The S&P/ASX 200 slipped as investor fears over Europe’s debt crisis resurfaced, putting pressure on equities. The index finished down 34.2 points, or 0.8%, at 4,108.5 — trading just above the day’s low as almost three shares fell for each one that rose.

Did the ASX 200 still make gains for the week despite the daily drop?

Yes. Despite the daily weakness, the benchmark managed to gain 1.3% for the week, breaking a four-week losing streak after stronger economic data from the US and Europe encouraged investors earlier in the week.

How did materials stocks like BHP Billiton and Rio Tinto perform?

Materials stocks were pushed lower after a commodities selloff. BHP Billiton fell 1.6% to $35.24 and Rio Tinto lost 0.5% to $62.52. Investors were also watching US aluminium maker Alcoa’s results for the first read on the materials sector.

What happened with gold and gold miners during the market move?

Gold continued to climb and gold miners bucked the broader market trend. Newcrest firmed about 0.8% to $30.75, while spot gold was up US$5.90 to US$1,625.15 an ounce at the close of Australian trading.

How did financial and insurance stocks fare and which banks were affected?

Financials and insurers fell, led by Suncorp which dropped 3.2% to $8.42. IAG lost 2.3% to $2.93 and QBE slid 0.2% to $13.12. The big banks also declined, with ANZ the hardest hit among them, finishing 1.4% lower at $20.45.

Which individual ASX stocks were the biggest losers on the day?

Goodman Fielder was the biggest loser, falling 7.1% to 39.5 (as reported). Qantas also gave back gains, falling about 3.9% to $1.465.

How did developments in Europe, like France’s debt auction, affect Australian markets?

A rise in borrowing costs at France’s latest government debt auction sparked concerns about the health of Europe’s second-largest economy. European markets closed lower and the euro tumbled, contributing to risk-off sentiment that weighed on Australian equities.

What upcoming data or events were investors watching that could affect markets next week?

Investors were looking to US aluminium company Alcoa’s results for insight into the materials sector, and to US non-farm payroll figures, which could set the tone for markets early next week.