Lower finish as banks and miners come off
The benchmark S&P/ASX 200 Index dropped 60.2 points, or 1.2 per cent, to 5032.2, while the All Ordinaries lost 60.6 points, or 1.2 per cent, to 5043.8.
The two biggest drags on the market were material and financial stocks, down 2.2 per cent and 1.1 per cent respectively.
"The materials sector has been a big underperformer and that's clearly related to the peaking and slowing down of the mining investment boom," said division director at Macquarie Private Wealth Martin Lakos.
BHP fell 2.3 per cent to $35.09, while rival Rio Tinto also dipped 2.3 per cent to $60.70. Fortescue Metals lost 6.1 per cent to $3.97.
Doing no favours for the miners, iron ore fell to a new low for 2013 of $US139 a tonne. It is predicted to continue to fall to around $US120.
Mr Lakos remained positive about resources, saying miners stand to benefit from a more stable iron ore price. With costs in the $US45-$US55 a tonne range, the industry, with the ability to deliver higher volumes and less cost associated with infrastructure, had the potential for more profit, he said.
Westpac led losses among banks, falling 1.2 per cent to $30.13, while ANZ slid 1.1 per cent to $28.18. Commonwealth Bank and NAB both dropped a little under 1 per cent, to $68.88 and $30.69.
The financial sector had been overstretched, so it was no surprise that share prices had eased, Mr Lakos said .
"Given that we've got five or six weeks to go before banks report, I think there's probably limited downside at the moment," he said.
Myer shares surged 5.5 per cent to $3.07 after reporting a better than expected half-year profit of $88 million. Since record lows in June last year, Myer shares have rebounded nearly 100 per cent, but are still well below their 2009 IPO level of $4.10.
The dollar rose almost a full cent to US103.70¢ in late trading, after the unemployment rate remained flat at 5.4 per cent and 71,500 jobs were added to the economy.
ANZ economist Justin Fabo said that despite the headline number there were worrying factors. "In trend terms, full-time employment fell 2000 in the month, not a sign of a strong labour market," he said.
Frequently Asked Questions about this Article…
The S&P/ASX 200 fell 60.2 points (about 1.2%) to 5,032.2 as investors took profits in bank shares and material stocks. A renewed fall in iron ore prices also hit resource stocks, contributing to the broad market decline.
Materials and financials were the main drags — the materials sector was down about 2.2% and the financial sector fell roughly 1.1%, driven by weaker miners and profit-taking in major banks.
BHP fell 2.3% to $35.09, Rio Tinto dropped 2.3% to $60.70, and Fortescue Metals slid 6.1% to $3.97, as miners were hit by another drop in iron ore prices.
Iron ore fell to a new low for 2013 of about US$139 a tonne and is predicted to fall toward around US$120. That weaker iron ore price has pressured mining stocks and the broader materials sector.
Martin Lakos from Macquarie Private Wealth said the materials sector has underperformed as the mining investment boom peaks and slows. He remained cautiously positive, noting industry costs of about US$45–US$55/tonne mean miners could still earn profits if they deliver higher volumes and benefit from more stable iron ore prices.
Westpac led bank losses, down 1.2% to $30.13, ANZ slid 1.1% to $28.18, while Commonwealth Bank and NAB fell just under 1% to $68.88 and $30.69 respectively. The falls were largely profit-taking after an extended run in financial stocks; commentators said the sector had been overstretched.
Yes — Myer shares jumped 5.5% to $3.07 after reporting a better-than-expected half-year profit of $88 million. Myer has rebounded nearly 100% since June last year, though it remains below its 2009 IPO price of $4.10.
The Australian dollar rose almost a full cent to about US103.70¢ after unemployment held at 5.4% and 71,500 jobs were added. However ANZ economist Justin Fabo warned full-time employment fell by 2,000 in trend terms, a worrying sign beneath the headline jobs print.
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