Key index down slightly after a jittery day

THE sharemarket finished a choppy session slightly lower yesterday, partly recovering from a four-month low hit earlier in the day but unable to fully overcome weakness in the banks.

By InvestSMART · 18 May 2012

By InvestSMART ·
18 May 2012

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THE sharemarket finished a choppy session slightly lower yesterday, partly recovering from a four-month low hit earlier in the day but unable to fully overcome weakness in the banks.

The S&P/ASX 200 index closed 8.1 points lower at 4157.4, its third straight losing day.

Among the main sectors, materials rose 0.8 per cent and energy gained 0.4 per cent but financials dropped 0.7 per cent.

Investors remained cautious after the European Central Bank said it had stopped providing liquidity to some Greek banks.

"The heightened threat of Greece is still a thorn in the side of traders," said CMC Markets' Ben Taylor. "There will be a point when value presents itself in this market. However, I believe there is more downside risk to be played out."

City Index analyst Peter Esho said the market had

not performed too badly and Asian markets were trading in positive territory. "There's been a bit of a shift towards optimism. We've seen some steep losses recently, and maybe there's a case for things to bounce a little bit."

Mr Esho said investors still had Greece on their minds but at least that country was headed towards elections.

Rebalancing of Australian portfolios saw banks and property stocks sold for an increased exposure back into the mining sector.

BHP Billiton was up 28? at $32.77 as the miner turned its back on a silver, lead and zinc joint-venture project in north Queensland. Rio Tinto advanced 17? to $58.16.

Coalworks was steady at $1.02 as it stepped up its calls for shareholders to reject a $142 million takeover offer as well as a separate attempt to dump its chairman and chief executive.

Among the big banks, Commonwealth Bank lost 75?, or 1.5 per cent, to $51.02 after it announced a third-quarter cash profit of

$1.75 billion, from

$1.7 billion for the previous corresponding period. Westpac sagged 46? (2.1 per cent), to $21.22, ANZ dipped 4? to $21.57 and NAB retreated 5? to $24.35.

Insurance Australia Group firmed 4? to $3.38 after it said it would review its business in the UK for a possible sale.

Leighton rose 13? to $18.05. The company has appointed an external consultant to review its disclosure procedures after breaching laws this year.

European markets were down last night. Several hours into the session, London's FTSE 100 had fallen 0.6 per cent, Frankfurt

0.4 per cent and Paris 0.5 per cent.

The dollar recovered a little from the five-month low struck on Wednesday, finishing in Australian trading at US99.47?.

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Frequently Asked Questions about this Article…

What happened to the S&P/ASX 200 index yesterday and why should investors care?

The S&P/ASX 200 finished a choppy session slightly lower, closing 8.1 points down at 4157.4 — its third straight losing day. The market partly recovered from a four-month low hit earlier in the day, showing volatility that everyday investors should watch when managing short-term risk and portfolio rebalancing.

Why were bank stocks weak and how did the big Australian banks perform?

Financials were the weakest sector, dropping about 0.7% as investors rebalanced portfolios away from banks and property into mining. Commonwealth Bank fell 1.5% to $51.02 after reporting a third-quarter cash profit of $1.75 billion (up from $1.7 billion a year earlier). Westpac slipped about 2.1% to $21.22, while ANZ and NAB retreated to $21.57 and $24.35 respectively.

Which sectors gained and why were miners in demand on the day?

Materials rose about 0.8% and energy gained 0.4% as investors shifted exposure back into the mining sector. This rebalancing helped lift major miners, reflecting a move away from beaten-down banks and property stocks toward mining stocks.

What corporate news moved BHP Billiton, Rio Tinto and Coalworks shares?

BHP Billiton was trading at $32.77 after it turned its back on a silver, lead and zinc joint-venture project in north Queensland. Rio Tinto advanced to $58.16 on the day. Coalworks was steady at $1.02 as it urged shareholders to reject a $142 million takeover offer and fought off a separate attempt to remove its chairman and chief executive.

How did concerns about Greece and ECB actions affect Australian markets?

Investors stayed cautious after the European Central Bank said it had stopped providing liquidity to some Greek banks. CMC Markets' Ben Taylor warned the Greek situation remained “a thorn” for traders and saw more downside risk, while City Index analyst Peter Esho noted that Asian markets were trading positively and there was some shift toward optimism as Greece heads toward elections.

Were there any notable moves among non-bank companies mentioned in the article?

Yes. Insurance Australia Group firmed about 4% to $3.38 after saying it would review its UK business for a possible sale. Leighton rose to $18.05 and has appointed an external consultant to review its disclosure procedures after breaching laws earlier this year.

How did international markets and the US dollar move, and what impact did that have?

European markets were lower — London’s FTSE 100 down about 0.6%, Frankfurt about 0.4% and Paris about 0.5% — contributing to global caution. The US dollar recovered slightly from a five-month low, finishing in Australian trading at roughly US99.47 cents, which can influence commodity prices and investor sentiment in Australia.

What practical takeaways should everyday investors draw from this choppy trading day?

The day shows how geopolitical risks (like the Greek bank liquidity issue) and sector rotation can quickly shift market mood. Everyday investors may want to review diversification, understand sector exposure (banks vs. miners), and avoid knee-jerk reactions — remembering analysts flagged both downside risk and pockets of potential value as markets settle.