Market slips on global, domestic turmoil
The Cypriot banking crisis dominated the first half of the week. Political events in Canberra consumed the second.
For the week, the benchmark S&P/ASX 200 Index dumped 152.9 points, or 3 per cent, to 4967.3, while the broader All Ordinaries index fell 148.5 points, or 2.9 per cent, to 4980.8.
Investors were rattled on Monday when Cyprus grabbed international headlines after it was revealed that European officials planned to charge a levy on Cypriot deposit holders to help the country pay for a €10 billion bailout.
Some market watchers were confused at the fallout, believing Cyprus too small to worry about.
It led to a rout of global markets on Monday, with the local and US markets shedding about 2 per cent.
The issue has refused to go away and analysts were warning that things could worsen after Cyprus failed to get agreement with Russia on a rescue loan.
"Longer term, there maybe meaningful consequences arising from the manner in which Europe has attempted to deal with the Cyprus issue," JP Morgan strategist Sally Auld said. "For markets, we suspect that investors may need to adjust expectations towards a longer more difficult journey in Europe."
On Thursday, political events in Canberra bedazzled voters when Labor stalwart Simon Crean called for a leadership spill of the Labor government.
It was another bizarre chapter in Labor Party history and the fallout continued on Friday when key members of the government's frontbench - who were also supporters of Kevin Rudd - retired to the backbench.
In financial market jargon, the event meant Australia's "political risk" increased dramatically. But that was not reflected in the sharemarket, with stocks climbing slightly on Friday with help from gains for the major banks.
The Reserve Bank released minutes from its recent monetary policy meeting this week.
Economists said the minutes suggested we could be near the bottom of the RBA's rate-cutting cycle.
For the week, Billabong International shares gained 5.5¢, or 7.9 per cent, to 75¢, after the troubled surfwear retailer confirmed takeover talks were continuing.
Billabong shares had plunged 20 per cent on Thursday before the company requested a trading halt to investigate the sudden sell-off.
David Jones slipped 5¢, or 1.6 per cent, at $3.02, after Australian supermodel Miranda Kerr severed her association with the retailer.
Leighton Holdings slipped $1.50, or 6.9 per cent, at $20.20, as three board members at the construction company stood down after a breakdown in relations with its major shareholder.
A shake-up of its board had been a long-time coming amid pressure from its major shareholder Hochtief, analysts said.
Frequently Asked Questions about this Article…
The sharemarket fell for the second week in a row as global and domestic events rattled investors. The S&P/ASX 200 dropped 152.9 points (3%) to 4,967.3 and the All Ordinaries fell 148.5 points (2.9%) to 4,980.8 after a mix of the Cyprus banking crisis and political turmoil in Canberra shook sentiment.
Markets were hit after reports that European officials planned a levy on Cypriot deposit holders to help fund a €10 billion bailout. The news triggered a global rout on Monday — local and US markets shed about 2% — and concerns deepened when Cyprus failed to secure a rescue loan from Russia, prompting warnings that Europe’s path could be longer and tougher.
Political events — notably Labor MP Simon Crean calling for a leadership spill and the subsequent reshuffle of frontbench supporters of Kevin Rudd — increased Australia’s perceived "political risk." Despite that, the sharemarket rose slightly on Friday, helped by gains in the major banks, showing markets can react differently to political uncertainty.
Minutes from the RBA’s recent monetary policy meeting suggested, according to economists cited in the article, that the economy could be near the bottom of the RBA’s rate‑cutting cycle — a signal investors watch for clues about future borrowing costs and market conditions.
Billabong shares plunged 20% on Thursday prompting a trading halt to investigate the sell‑off, then later gained 5.5¢ (7.9%) to 75¢ after the company confirmed takeover talks were continuing. Investors should watch takeover developments and trading halts closely because they can cause rapid price swings.
David Jones shares fell 5¢ (1.6%) to $3.02 after Australian supermodel Miranda Kerr severed her association with the retailer. The move highlights that celebrity endorsements or associations can influence investor sentiment and share prices in the retail sector.
Leighton Holdings slipped $1.50 (6.9%) to $20.20 after three board members stepped down following a breakdown in relations with its major shareholder, Hochtief. A board shake‑up can signal governance or strategic changes and may increase short‑term uncertainty for shareholders, particularly when it follows sustained pressure from a major investor.
The article shows volatility can come from both international banking events and local politics. Everyday investors should stay informed about key drivers mentioned (like the Cyprus crisis, RBA signals and company‑specific news such as takeovers or board changes), avoid knee‑jerk decisions based on short‑term headlines, and focus on company fundamentals and longer‑term goals when navigating market turbulence.
Call 1300 880 160
Start a chat
Schedule a call
