Investors run for cover after Cyprus votes
The benchmark S&P/ASX 200 Index lost 20.1 points to 4967.3, while the broader All Ordinaries lost 21.8 points to 4982.6.
Cyprus remained in the headlines, with the Cypriot parliament voting down a eurozone plan to force bank depositors to share the cost of a €10 billion bailout.
Jubilant crowds outside the Cypriot parliament applauded, but the predicament reminded global investors of the fragility of Europe's banking system.
BBY institutional dealer Anson Rosewall said the uncertainty was pushing investors back to safer assets. "What's been taking place in Europe has destabilised sentiment towards risk assets, and you are seeing that in the rotation back into safe-haven assets like the US dollar and gold," he said.
But some analysts said events in the Mediterranean were not as bad as thought. Laurence Fink, chief executive of BlackRock, the world's largest asset manager, said Cyprus was not a big economic problem and Europe would come to a resolution.
"The standoff between Cyprus and eurozone policymakers reminds us of the frailty in Europe, whose economic problems will take a multi-year fix," Mr Fink told Bloomberg Television.
There were hefty falls from the big miners in response to a bleak outlook for iron ore prices.
The big two - BHP and Rio - dropped more than 2 per cent on Wednesday after Goldman Sachs forecast iron ore prices would fall from this year's $US139 a tonne to $US80 a tonne in 2015.
Goldman Sachs cut its estimate for iron ore prices on expectations that demand would moderate and steel production would slow in China, the world's largest buyer.
BHP and Rio, whose shares also trade in London, were the subject of several analyst downgrades overnight. BHP declined 93¢, or 2.7 per cent, to $33.62, while Rio fell $1.18, or 2 per cent, to $57.48.
Fortescue Metals slipped 9¢, or 2.3 per cent, to $3.80, and Mount Gibson Iron dropped 3¢, or 5.2 per cent, to 55¢.
The dollar largely held its ground after Cyprus' rejection of the bank deposit levy. At the close, the currency was trading at US103.79¢, down from US103.80¢ on Tuesday.
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The sharemarket fell for a third straight day: the S&P/ASX 200 lost 20.1 points to 4,967.3 and the All Ordinaries slipped 21.8 points to 4,982.6, as investors worried about Europe's financial stability after the Cyprus vote.
Cyprus's parliament voted down a eurozone plan to make bank depositors share the cost of a €10 billion bailout; jubilant crowds aside, the rejection reminded global investors of the fragility of Europe's banking system and unsettled risk sentiment.
According to institutional dealer Anson Rosewall, uncertainty pushed investors into safe‑haven assets such as the US dollar and gold, reflecting a rotation away from riskier investments.
Laurence Fink said Cyprus was not a big economic problem and that Europe would come to a resolution, but he also warned the standoff highlights Europe's frailty and that its economic problems will take a multi‑year fix.
Goldman Sachs forecast iron ore prices falling from about US$139 a tonne this year to US$80 a tonne in 2015, which contributed to significant falls in big miners' shares as investors pared exposure to the sector.
BHP fell 93¢ (2.7%) to $33.62, Rio Tinto dropped $1.18 (2.0%) to $57.48, Fortescue Metals slipped 9¢ (2.3%) to $3.80, and Mount Gibson Iron declined 3¢ (5.2%) to 55¢.
Goldman Sachs lowered its iron ore outlook on expectations that demand will moderate and steel production in China — the world's biggest buyer — will slow, reducing pressure on prices.
The Australian dollar largely held its ground after the Cyprus vote, trading at US103.79¢ at the close, very slightly down from US103.80¢ on Tuesday.
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