Market drifts lower as investors look to Europe

THE Australian sharemarket closed weaker as investors awaited an outcome to Greece's debt restructure plans, with euro zone finance ministers scheduled to meet.

By InvestSMART · 24 Jan 2012

By InvestSMART ·
24 Jan 2012

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THE Australian sharemarket closed weaker as investors awaited an outcome to Greece's debt restructure plans, with euro zone finance ministers scheduled to meet.

The S&P/ASX 200 index fell 14.5 points, or 0.34 per cent, to 4225.1, and the broader All Ordinaries slipped 15.4 points, or 0.36 per cent, to 4287.6.

The March share price index futures contract was 28 points lower at 4191, with 15,467 contracts traded.

An IG Markets strategist, Stan Shamu, said private owners of Greek debt were believed to have made their maximum offer for losses they were willing to accept under a bond swap.

"This has raised concerns that any further demands may kill off a voluntary agreement," Mr Shamu said, adding details of the bond swap were hoped to have been finalised by Friday. "A lack of an agreement by now is further unsettling investors and risk assets could come undone should more delays materialise."

Australia's producer price index rose 0.3 per cent in the December quarter, below expectations of a 0.4 per cent rise.

The lower-than-expected rise added to expectations third quarter consumer price index figures due tomorrow would show inflation pressures were subdued enough to allow a further interest rate cut in February, Mr Shamu said.

Consumer discretionary stocks benefited from the data. Harvey Norman was up 2? at $2.05 and JB Hi-Fi also rose 2?, to $12.

BHP Billiton was down 24? at $37.24, Rio Tinto put on 36? to $67.89 and Fortescue Metals fell 19?, or 3.66 per cent, to $5.

The banking sector was broadly weaker. Westpac was down 22? at $20.46, ANZ eased 2? to $20.87, National Australia Bank slipped 3? to $23.85 and Commonwealth Bank was down 9? at $49.74.

Making headlines, China's state-owned Sinopec signed up for more gas and a higher equity interest in the Origin Energy and ConocoPhillips-led Australia Pacific liquefied natural gas project. Origin shares dipped 1? to $13.55.

Ansell slipped 1? to $14.96, after the gloves and condoms supplier appointed Koreca Industries to distribute its products in South Korea.

Most Asian markets were closed yesterday for Chinese New Year.

National turnover was 1.33 billion shares worth $3.06 billion.

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Frequently Asked Questions about this Article…

Why did the Australian sharemarket close weaker today and how did the ASX 200 perform?

The market slipped as investors awaited the outcome of Greece's debt-restructure plans and a euro-zone finance ministers' meeting. The S&P/ASX 200 fell 14.5 points to 4,225.1 and the All Ordinaries eased 15.4 points to 4,287.6. March futures were also weaker, trading about 28 points lower at 4,191.

How did uncertainty around Greece's debt swap affect investor sentiment and risk assets?

IG Markets strategist Stan Shamu said private holders of Greek debt appeared to have reached the maximum losses they would accept, raising concerns that further demands could scuttle a voluntary agreement. That lack of agreement and any delays unsettled investors and put pressure on risk assets.

What did Australia’s producer price index (PPI) report show and what could it mean for interest rates?

Australia's PPI rose 0.3% in the December quarter, below expectations of a 0.4% rise. The smaller-than-expected increase added to expectations that upcoming consumer price index figures might show subdued inflation and could allow for another interest rate cut in February, according to the strategist quoted in the article.

Which consumer stocks gained after the inflation-related data and how did they move?

Consumer discretionary names benefited from the data: Harvey Norman rose to $2.05 and JB Hi‑Fi increased to $12, reflecting investor interest in retail and consumer-facing stocks following the softer inflation signals.

What happened to major mining stocks like BHP Billiton, Rio Tinto and Fortescue Metals?

Mining stocks moved unevenly: BHP Billiton was down at $37.24, Rio Tinto rose to $67.89, while Fortescue Metals fell to $5, a decline of about 3.66% on the day.

How did Australia's big banks trade during the session?

The banking sector was broadly weaker: Westpac was down at $20.46, ANZ eased to $20.87, National Australia Bank slipped to $23.85, and Commonwealth Bank fell to $49.74.

What corporate news moved Origin Energy and Ansell shares today?

China's state-owned Sinopec agreed to take more gas and a larger equity interest in the Origin Energy and ConocoPhillips-led Australia Pacific LNG project, and Origin shares dipped to $13.55. Ansell slipped to $14.96 after appointing Koreca Industries as its distributor in South Korea.

What was the overall market turnover and were there any regional market factors to note?

National turnover was about 1.33 billion shares worth roughly $3.06 billion. The article also noted most Asian markets were closed for Chinese New Year, which reduced regional trading activity.