Market loses energy as profit-takers swoop

SELLERS moved back into the market yesterday, stripping away almost all the gains made on Wednesday.

By InvestSMART · 19 Aug 2011

By InvestSMART ·
19 Aug 2011

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SELLERS moved back into the market yesterday, stripping away almost all the gains made on Wednesday.

The S&P/ASX 200 Index closed 52.7 points, or

1.22 per cent, lower at 4251.2. Its fall matched losses across Asia.

City Index chief markets analyst Peter Esho said energy stocks pulled the benchmark down from early in the session.

"Overall, the market has recovered over the past two weeks and it's now just a period of consolidating its gains," he said.

"All the large key industrial companies that have commenced reporting since the beginning of last week have broadly met market expectations. I think the market finds comfort in that there's no single problematic area or systemic issue of earnings falling across the economy."

BBY institutional dealer Stuart Smith said fewer investors were trading because of the uncertain outlook arising from the possibility of a recession again developing in the US and Europe.

"People are looking to see, is Europe going to melt down? Don't know. Is America going to pick up? Not sure," he said.

"That's the type of market [we're in], where no one knows what to do now and Australia seems to be waiting for a bit of a leap from overseas before it moves on."

Among energy stocks, Oil Search was down 15? at $6.33, Santos was off 46? at $11.68 and Woodside Petroleum was 89? weaker at $36.87.

Wealth manager AMP closed up 11? at $4.26 despite an 18 per cent fall in first-half profit to $349 million.

Shares in Coles owner Wesfarmers rose 11? to $30.41 after the company reported a positive outlook and a 23 per cent rise in full-year profit.

APN News & Media shares sold off heavily after the diversified publishing house booked a large impairment charge against its New Zealand newspapers and reported a first-half loss. APN finished down 11?, or 12.4 per cent, at 78?.

BHP Billiton lost 72? to $39.10 and Rio Tinto was $1.08 lower at $73.34.

Iron ore miner Fortescue Metals was 19? weaker at $6.05.

Shares in Foster's Group, which has again rejected a $9.51 billion takeover bid from SABMiller, were up 4? at $5.

Among the banks, Westpac was 13? lower at $20.38, National Australia Bank was 20? lower at $23.16, ANZ fell 16? to $20.42 and Commonwealth lost 8? to $47.32.

The spot gold price was up $US6.95 at $US1794.10 an ounce at the close.. Newcrest slipped 43? to $38.66.

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Frequently Asked Questions about this Article…

Why did the ASX 200 fall yesterday and how big was the drop?

Sellers re-entered the market and profit‑taking stripped away recent gains, sending the S&P/ASX 200 down 52.7 points, or about 1.22%, to 4,251.2. Analysts said energy stocks were a major drag and that the market is largely consolidating gains after a two‑week recovery.

How did energy stocks drive the market sell‑off on the ASX?

Energy shares pulled the benchmark down early in the session, with several oil and gas names weakening and prompting broader profit‑taking. City Index’s chief markets analyst Peter Esho specifically pointed to weakness in energy stocks as a key reason for the decline.

Which energy companies were hit and what were their share prices?

The article notes Oil Search trading around $6.33, Santos at about $11.68 and Woodside Petroleum near $36.87 — all were weaker on the day and contributed to the sector’s drag on the index.

AMP’s shares rose despite a profit fall — what happened there?

AMP closed higher at about $4.26 even though it reported an 18% fall in first‑half profit to $349 million. The share move suggests investors were reacting to factors beyond the headline profit number.

How did Wesfarmers perform and why does it matter for investors?

Wesfarmers shares rose to about $30.41 after the company reported a positive outlook and a 23% rise in full‑year profit. For everyday investors, that combination of improved earnings and guidance can support confidence in the stock.

Why did APN News & Media shares sell off sharply?

APN News & Media took a large impairment charge against its New Zealand newspapers and reported a first‑half loss, which led to heavy selling in the stock.

What happened to major miners and resources stocks like BHP, Rio Tinto, Fortescue and Newcrest?

The mining sector was generally weaker: BHP traded around $39.10, Rio Tinto was about $73.34 (down roughly $1.08), Fortescue Metals near $6.05 and Newcrest around $38.66. Resource names faced downward pressure alongside the broader market.

How did bank shares fare and is this a sign of broader trouble in financials?

Major banks were lower on the day — Westpac around $20.38, National Australia Bank about $23.16, ANZ near $20.42 and Commonwealth Bank at roughly $47.32. Commentators in the article noted the market is in a cautious phase amid uncertainty about global growth, but also that large industrial companies reporting so far have broadly met expectations, suggesting no single systemic earnings issue.