Market slips but avoids the US plunge

THE sharemarket closed 0.7 per cent lower on Thursday, following steep falls on Wall Street overnight.

By InvestSMART · 9 Nov 2012

By InvestSMART ·
9 Nov 2012

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THE sharemarket closed 0.7 per cent lower on Thursday, following steep falls on Wall Street overnight.

The benchmark S&P/ASX 200 Index was down 32.7 points at 4483.8.

Wall Street tumbled more than 2 per cent and posted its largest fall in almost a year after Fitch Ratings warned that the US would lose its AAA credit rating if the government failed to tackle looming tax increases, spending cuts and the fast-approaching debt ceiling.

CMC Markets analyst David Land said the local market performed well considering the decline in the US.

"On a like-for-like basis, we've done particularly well," Mr Land said. "The market is probably viewing this as a temporary fluctuation, more than a shift in the market."

BHP Billiton dropped 31? to $34.67, Rio Tinto dipped 65? to $59.35 and Fortescue lost 11? to $3.94.

ANZ dropped $1.14, or 4.5 per cent, to $24.37 after it went ex-dividend. Westpac gained 7? to $25.93, National Australia Bank fell 12? to $24.87 and Commonwealth Bank gained 38? to $58.18.

Maintenance services group Transfield Services gained 2? to $1.59 after it won a $200 million, five-year contract for maintenance and operations services to QGC's Queensland coal seam gas assets.

West Australian rare-earths miner Lynas Corp was up 8.5? at 80.5? after Malaysian activists lost a court battle to stop the company firing up a plant that had sparked health concerns.

Qantas fell 2? to $1.28 after announcing that about 150 employees and 250 contractors would be made redundant as part of changes to engineering operations.

New Zealand listed online accounting software group Xero joined the Australian exchange on Thursday, and closed unchanged at $4.48.

The price of gold closed at $US1718.86 an ounce, down $US5.09.

National turnover was 1.68 billion securities worth $5.41 billion, with 328 stocks up, 583 down and 376 unchanged.

Meanwhile, bond futures prices rose after Barack Obama was returned as US President, and data showed no change in the national unemployment rate.

The December 10-year bond futures contract was trading at 96.925 (implying a yield of 3.075 per cent), up from 96.885 (3.115 per cent). The three-year contract was at 97.390 (2.610 per cent), up from 97.350 (2.650 per cent).

RBC fixed-income strategist Michael Turner said global bond markets strengthened after the US election as investors focused on the economic challenges facing Mr Obama.

He said global factors would again be the focus in trading on Friday.

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Frequently Asked Questions about this Article…

What happened to the ASX (S&P/ASX 200) on Thursday?

The sharemarket closed 0.7% lower on Thursday. The S&P/ASX 200 was down 32.7 points at 4,483.8, following steep falls on Wall Street overnight.

Why did Wall Street fall and how did that affect Australian markets?

Wall Street tumbled more than 2% after Fitch Ratings warned the US could lose its AAA credit rating if the government failed to address looming tax increases, spending cuts and the debt ceiling. The US sell-off weighed on local markets, but analysts like CMC Markets' David Land said the ASX performed relatively well and traders appeared to treat the move as a temporary fluctuation.

Which major miners and resources stocks moved and what were their prices?

Several big miners moved: BHP Billiton closed at $34.67, Rio Tinto at $59.35 and Fortescue at $3.94. Lynas Corp also rose after a Malaysian court ruling allowed it to proceed with a controversial plant.

How did the big Australian banks trade and what should investors note about ANZ?

Bank share prices were mixed: Westpac closed at $25.93, National Australia Bank at $24.87 and Commonwealth Bank at $58.18. ANZ fell $1.14 to $24.37 after it went ex‑dividend — a reminder that share prices often drop by approximately the dividend amount on the ex‑dividend date.

Which companies had notable corporate news that affected their share price?

Transfield Services rose to $1.59 after winning a $200 million, five‑year maintenance and operations contract for QGC's Queensland coal seam gas assets. Qantas fell to $1.28 after announcing about 150 employees and 250 contractors would be made redundant in engineering operations. New Zealand software group Xero listed on the ASX and closed unchanged at $4.48.

How did bond futures and yields react to the US election and economic data?

Bond futures prices rose after Barack Obama was returned as US President and national unemployment was unchanged. The December 10‑year bond futures contract traded at 96.925 (implying a yield around 3.08%), and the three‑year contract was at 97.390 (around 2.61%). RBC strategist Michael Turner said global bond markets strengthened as investors focused on the economic challenges ahead.

What was market breadth and turnover on the day?

National turnover was 1.68 billion securities worth $5.41 billion. On the day, 328 stocks rose, 583 fell and 376 were unchanged.

What happened to the gold price and might that matter to everyday investors?

Gold closed at US$1,718.86 an ounce, down US$5.09. For everyday investors, movements in the gold price can reflect shifts in risk sentiment and safe‑haven demand, so it's something to watch alongside equities and bond market moves.