Investors rebuff US efforts to tame debt crisis
DOMESTIC shares closed lower yesterday as the congressional deal to resolve US debt issues failed to allay investor concerns about the faltering American economy.
DOMESTIC shares closed lower yesterday as the congressional deal to resolve US debt issues failed to allay investor concerns about the faltering American economy.The benchmark S&P/ASX200 index ended the session down 64.2 points, or 1.43 per cent, at 4433.6, while the broader All Ordinaries index was down 62.8 points, or 1.37 per cent, at 4510.3.Lawmakers in the US House of Representatives agreed early yesterday to raise the limit on US sovereign debt, green-lighting at least $US2.1 trillion ($19 trillion) in spending cuts over the next decade.An IG Markets research analyst, Ben Potter, said the move failed to ease market concerns about the American economy. "Pretty much all of the good work that happened [on Monday] was undone," Mr Potter said. "This deal they're signing at the moment is really going to cut back spending, which is going to weigh on the economy. Markets also did not like the economic news overnight at all."The US manufacturing sector was flat in July, the Institute of Supply Management's indexed survey of purchasing managers showed.Mr Potter said the widely expected decision by the Reserve Bank of Australia to keep interest rates on hold was welcomed by the market.Locally, the big banks had a rough day, with National Australia Bank down 52?, or 2.12 per cent, at $23.97, Westpac down 44?, or 2.11 per cent, at $20.37, ANZ down 47?, or 2.21 per cent, to $20.82 and Commonwealth down 67? at $49.42.Among healthcare stocks, CSL fell $1.01 to $30.22, and Fisher and Paykel Healthcare fell 7? to $2.Resource stocks were also down. BHP Billiton fell 73?, or 1.73 per cent, to $41.57, and Rio Tinto fell $1.47, or 1.8 per cent, to $80.05. Aquarius Platinum was the worst performing stock in the top 100, falling 22?, or 5.03 per cent, to $4.15.The price of gold in Sydney closed at $US1624.60 per fine ounce, up $US10.66 from $US1613.94 on Monday. Gold miner Newcrest rose 43?, or 1.09 per cent, to $40.03.Some property stocks withstood the sell-off, with Westfield Retail Trust up 3? at $2.49 and Stockland up 2? at $3.06. Kathmandu finished higher after it forecast better than expected earnings. Its shares rose 11?, or 6.29 per cent, to $1.86.Preliminary national turnover was 1.87 billion shares, worth $4.65 billion, with 352 shares up, 706 down, and 356 steady.