Market battered on all fronts
THE local market plunged to a two-month low yesterday after battling headwinds on all fronts, with negative offshore leads, concerns about Greece's debt woes and disappointing local economic growth figures all weighing on sentiment.
THE local market plunged to a two-month low yesterday after battling headwinds on all fronts, with negative offshore leads, concerns about Greece's debt woes and disappointing local economic growth figures all weighing on sentiment.The benchmark S&P/ASX200 index fell 61 points, or 1.45 per cent, to 4143.7.The broader All Ordinaries lost 61.1 points, or 1.4 per cent, to 4234.4.The decline was the biggest this year, wiping more than $18 billion off the market's value. It was also the worst day for the market since December 19, shrinking share gains for 2012 to a little more than 2 per cent.The dollar also took a beating, extending its overnight losses after the disappointing gross domestic product figures, which raised the chances of another Reserve Bank rate cut. The currency was trading at $US1.053, 85 yen, 80.19 euro cents and 66.9 pence.Investors were bearish in light of concerns about a hard landing in China and rattled by fears of a disorderly default in Greece. Both worries had pulled European markets and Wall Street sharply lower overnight.Austock Securities adviser Michael Heffernan said the trading session was unequivocally negative, with commodity markets putting in the worst performance for some time overnight.The biggest weight on the market was concern about a Greek default as a deadline loomed for Greek bondholders to accept a debt-swap deal."Greece is sending shivers around the place," Mr Heffernan said. "Sentiment is a bit shaky, like it was when the Greek situation was front and centre months ago."But I think we'll get over it. My view is the creditors will make an agreement to take the haircut, and certainly when you look at the US futures market, that's positive at the moment."Australian GDP rose 0.4 per cent in the December quarter, at a slower pace than had been forecast, showing the domestic economy was "still pretty anaemic", he said."The only silver lining is that it might, of course, cause the Reserve Bank to get out of its terms-of-trade torpor and actually cut rates next month."All sectors ended in the red, but mining stocks once again led the losses as investors re-evaluated demand for resources after China lowered its growth target. Market heavyweight BHP Billiton fell 53?, or 1.5 per cent, at $34.05, plumbing a new low for this year.Rio Tinto backtracked $1.20, or 1.9 per cent, to $62.42 after announcing it would close its Lynemouth aluminium smelter in Northumberland.Miner Kagara dropped 39 per cent, or 12?, to 19? as it came off a trading halt after selling its Lounge Lizard nickel deposit in Western Australia state to Western Areas. Kagara also lowered its zinc and copper production guidance.The big four banks were all weaker, with Commonwealth Bank losing the most ground, down 92? at $47.66.Making headlines, Telstra will participate in the rollout of the national broadband network after finalising its $11 billion agreement with the federal government and NBN Co. Telstra slipped 2? to $3.23 after initially rising on the deal.Packaging maker Amcor will expand its flexible packaging business with the $238 million acquisition of Aperio Group. Amcor gained 10? to $6.90.A final decision on Foxtel's proposed takeover of Austar looks some way off after the competition regulator opened a new round of market consultation on the $2.5 billion transaction. But Austar rose 7? to $1.43 after Foxtel said it was doing all it could to secure the deal.Australia's largest gold miner, Newcrest, was down $1.22, or 3.8 per cent, at $30.60, after the gold price fell to $US1675.80 per ounce.Credit Suisse strategist Damien Boey expected shares to fall more because policymakers in the US, Europe and China were "hamstrung", leaving their economies unusually vulnerable. "I don't think we're anywhere near the bottom," he said."There is probably a very sharp slowdown, if not a global hard landing, that is necessary in order for our economies and our societies to reset and grow from a lower base."