Investors spooked by eurozone jitters
Having fallen as much as 1.5 per cent in early trade, the benchmark S&P/ASX 200 Index finished just above 5000, down 52.2 points, or 1 per cent, to 5003.6, while the broader All Ordinaries fell 50.9 points, or 1 per cent, to 5021.8.
After starting the week off on a positive note, investors were spooked by the inconclusive Italian election results. The market might be worried about the implementation of austerity measures, aimed at holding the country's finances together, with a negotiated or minority government.
"We haven't really seen Europe rear its ugly head ... we know it's an issue, we know it's quantifiable, but this just puts it back in investors' faces again," said RBS Morgans trader Luke McElwaine.
He said there had been significant resistance at the 5000 level, but it also proved there was support to continue to consolidate at this level.
The resources sector was hit doubly hard, as cyclone Rusty forced the closure of Port Hedland, a major terminal for iron ore exports out of Western Australia. Despite the closure, which would lower world supplies, iron ore prices slipped 1.1 per cent to $US151.90 a tonne.
BHP dropped 1.5 per cent to $36.35, Fortescue Metals lost 2.9 per cent to $4.61 and Rio Tinto, which had its outlook downgraded to negative by ratings agency Standard & Poor's, fell 0.9 per cent to $65.57.
Atlas Iron slipped 3.4 per cent to $1.545 after the up-and-coming miner reported a $256 million first-half loss caused by a number of write-downs in the value of its assets.
Virgin Australia shares lost 5.8 per cent to 41¢ after the airline failed to commit to a tripling of Tiger's Australia-based fleet, one of the conditions of taking a controlling stake in the budget airline. On top of this, Virgin reported a 56 per cent fall in first-half net profit to $23 million.
Shares in Ramsay Health Care jumped 1 per cent after reporting a 10.1 per cent increase in net profit. The private hospital operator indicated it was keen on expanding to help meet the demands of Australia's ageing population.
QBE, as well as confirming a plan to shed 700 jobs, reported an 8 per cent rise in full-year profit.
However, the result failed to impress investors as the insurance provider's shares fell 2.2 per cent to $12.75.
A $47 million first-half loss caused by weak coal prices, among other issues, weighed on Whitehaven Coal shares, which slumped 3 per cent to $2.91.
Frequently Asked Questions about this Article…
The market was spooked by eurozone instability after inconclusive Italian election results and by commodity disruptions from Cyclone Rusty. The S&P/ASX 200 finished just above 5,000, down 52.2 points (about 1%) to 5,003.6, while the All Ordinaries fell 50.9 points (about 1%) to 5,021.8.
Inconclusive Italian election results raised worries about possible austerity measures under a negotiated or minority government, bringing eurozone risk back into investors' faces. Traders noted the market showed resistance around the 5,000 level but also support to consolidate there, which contributed to the drop in sentiment.
Cyclone Rusty forced the closure of Port Hedland, a major iron ore terminal, which reduced supply expectations; nevertheless iron ore prices slipped 1.1% to US$151.90 a tonne. The resources sector was hit: BHP fell 1.5% to $36.35, Fortescue Metals lost 2.9% to $4.61 and Rio Tinto dropped 0.9% to $65.57.
Rio Tinto fell 0.9% to $65.57 after its outlook was downgraded to negative by ratings agency Standard & Poor's, which weighed on investor confidence in the stock.
Several results influenced prices: Atlas Iron slipped 3.4% to $1.545 after reporting a $256 million first-half loss from asset write-downs; Virgin Australia fell 5.8% to 41¢ after a 56% fall in first-half net profit to $23 million and failing to commit to tripling Tiger's Australia fleet; Whitehaven Coal slumped 3% to $2.91 after a $47 million first-half loss tied to weak coal prices.
Ramsay Health Care shares jumped 1% after reporting a 10.1% increase in net profit and signalling expansion plans to meet demand from Australia’s ageing population. QBE reported an 8% rise in full-year profit and plans to shed 700 jobs, but its shares fell 2.2% to $12.75.
The article notes 5,000 acted as a psychological level where there was resistance earlier but also evidence of support as the market consolidated. For everyday investors, movements around that level can reflect short-term volatility driven by global events (like European politics) and commodity shocks.
The article reports markets were clearly spooked by eurozone uncertainty and by the Port Hedland closure from Cyclone Rusty, which affected resources shares and prices. It shows these factors can trigger short-term volatility, so investors should watch developments in Europe and major commodity hubs—but the piece does not provide specific buy/sell advice.
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