The Australian sharemarket posted its biggest weekly fall since late May on worries about a protracted fiscal stand-off in the United States.
The benchmark S&P/ASX200 index fell 12.4 points, or 0.3 per cent, to 4336.8. It fell 2.8 per cent for the week and has lost 5.1 per cent since marking 15-month highs in October. The broader All Ordinaries index fell 10.5 points, or 0.2 per cent, to 4360.1.
There has been a confluence of bad news that has spooked investors, including Europe slipping into another recession and worries about the economic recovery in the US.
But the biggest weight on the market was what Washington will do about the "fiscal cliff" that is scheduled to begin after the new year, with large, automatic budget cuts and tax increases expected to weigh on the US economy if no deal is reached.
A BBY client adviser, Henry Jennings, said several overseas factors had contributed to weakness on the local market. "Everyone is now focusing on the US fiscal cliff, coupled with problems in Europe," Mr Jennings said. "We've also got this escalation in the Gaza Strip, with rockets fired at Tel Aviv, which is never a good thing for markets.
"There's still a lot of uncertainty out there. Confidence is low and volumes are reflecting that."
Banking shares led losses, with ANZ falling 39?, or 1.6 per cent, to $23.66, Westpac down 0.9 per cent, Commonwealth Bank falling 0.7 per cent and National Australia Bank down 0.1 per cent.
But higher iron ore prices lent support to some of the miners after China announced its economy was turning the corner and was likely to meet its growth target for the year.
Industrial output, exports and retail sales all beat expectations in October.
Rio Tinto rose 8?, or 0.1 per cent, to $56.90 and Newcrest Mining rose 1.1 per cent as the gold price held steady, but BHP Billiton fell 0.6 per cent, or 19?, to $32.93.
Whitehaven Coal fell 1.8 per cent to a record low of $2.74 after the company announced a decision to scale back its business development unit and Brisbane presence.
Iluka fell 12? to $7.79 following downgrades by brokers this week.
Some defensives gained, with the supermarket retailer Wesfarmers and blood products maker CSL both rising 0.6 per cent.
"Whilst selling pressures have abated somewhat, there is still very much a tendency for traders to get into defensive assets," said Tim Waterer, a senior trader at CMC Markets.
The clothing and camping equipment retailer Kathmandu rose 6? to $1.41 after it posted a 19.5 per cent boost in sales for the past 15 weeks.
Cash Converters shares rose 1? to 99? after the company said it expected to increase its short-term lending this financial year as smaller providers leave the industry due to regulatory changes.
On Wall Street on Thursday, the Dow Jones Industrial Average fell another 0.2 per cent, taking this week's loss to more than 2 per cent so far amid worries about continuing gridlock in Washington over tax increases and spending cuts.
Europe's main stockmarkets retreated after news that the eurozone economy had fallen into recession again as a result of the region's sovereign debt crisis.
In Japan, however, the Nikkei rose 2 per cent on Friday to its highest level in more than a week, after the leader of Japan's main opposition party, seen as likely to become premier after an election next month, called for more monetary policy easing.
Frequently Asked Questions about this Article…
Why did the Australian sharemarket end the week on a low note?
The ASX200 finished lower after its biggest weekly fall since late May. Investors were spooked by a mix of global issues — concerns about a protracted US “fiscal cliff,” signs Europe had slipped back into recession, and geopolitical tensions in the Gaza Strip — which dented confidence and reduced trading volumes.
How much did the ASX200 and All Ordinaries fall and what does that mean for everyday investors?
The benchmark S&P/ASX200 fell 12.4 points (about 0.3%) to 4,336.8 on the day and was down around 2.8% for the week; the broader All Ordinaries also eased. For everyday investors this underscores that global macro events can quickly affect local markets, so maintaining a diversified plan and focusing on long‑term goals can help ride out short-term volatility.
Which bank shares led the losses on the ASX and how badly were they affected?
Banking shares led the market losses. ANZ, Westpac, Commonwealth Bank and National Australia Bank all fell, with ANZ down about 1.6% to $23.66, Westpac down 0.9%, Commonwealth Bank down 0.7% and NAB down 0.1% — showing the banking sector was among the most sensitive to the risk‑off mood.
Did mining stocks do better, and what drove miner performance this week?
Some miners received support after China released better‑than‑expected data — industrial output, exports and retail sales beat forecasts — which lifted iron ore prices. Rio Tinto and Newcrest were up (Newcrest helped by a steady gold price), while BHP Billiton slipped slightly, so miner performance was mixed but aided by constructive China indicators.
What happened to Whitehaven Coal and Iluka this week?
Whitehaven Coal hit a record low after the company announced it would scale back its business development unit and its Brisbane presence. Iluka’s shares fell after brokers issued downgrades. Both moves show how company‑specific news and broker actions can sharply move smaller and mid‑cap stocks.
Which defensive and consumer stocks gained during the downturn?
Defensive names outperformed modestly: supermarket/retailer Wesfarmers and blood products maker CSL both rose about 0.6%. Retailers with positive trading updates also attracted buyers — Kathmandu rallied after reporting a strong sales boost — reflecting a rotation into perceived defensive or resilient companies.
How is the US “fiscal cliff” affecting Australian markets and investor sentiment?
The prospect of automatic tax increases and budget cuts in the US if no deal is reached (the so‑called fiscal cliff) was cited as the biggest drag on markets. That uncertainty about US policy outcomes weighed on global growth expectations and pushed investors toward defensive positions, contributing to weaker sentiment on the ASX.
How did other global markets influence the ASX’s performance this week?
Global markets set a negative tone: the Dow fell further amid worries about US political gridlock, European markets retreated after news the eurozone had slipped back into recession, while Japan’s Nikkei actually rose after calls for more monetary easing. Overall, the mix of weaker Europe and US policy risk, partially offset by positive China data, helped shape the ASX’s mixed performance.
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