Market tumbles as euro zone debt fears return
THE stockmarket fell sharply yesterday, breaking a six-day winning streak, as investors took an interest rate cut from the central bank as a signal that the euro zone debt crisis will hurt the local economy.
THE stockmarket fell sharply yesterday, breaking a six-day winning streak, as investors took an interest rate cut from the central bank as a signal that the euro zone debt crisis will hurt the local economy.At the close, the benchmark S&P/ASX200 index was down 64.1 points, or 1.5 per cent, at 4,257.2, while the All Ordinaries fell 63.3 points, or 1.5 per cent, to 4,316.2.The Reserve Bank cut the cash rate by 25 basis points to 4.25 per cent, its second successive rate cut in as many months. Dealers said the move was a sign that the contagion from the euro zone debt crisis was having a growing effect on Australia's economic health."While the European situation is getting a lot of the attention, its impact on China could affect our economy in a big way," Cameron Stockbrokers Limited's Adrian Leppinus said. "The RBA's obviously seeing signs that things in Europe are coming to our shores."The rate cut came after ratings agency Standard & Poor's said European heavyweights France and Germany along with 13 other euro zone nations were at risk of a credit downgrade if they failed to agree measures to tackle the debt crisis this week.The news dampened market optimism after German Chancellor Angela Merkel and French President Nicolas Sarkozy said they were pushing for a rewrite of the European Union's governing rules to strengthen economic cooperation.Industrial, resources and mining stocks all took a hit yesterday.BHP Billiton fell 55?, or 1.48 per cent, to $36.71, while Rio Tinto lost $1.45, or 2.16 per cent.Newcrest dropped 3.96 per cent, or $1.40, to $33.99 after Deutsche Bank downgraded the stock after a landslide halted mining at its Cadia goldmine in NSW.Woodside fell 71? to $33.48, Santos was down 18? at $13.36 and Oil Search eased 7? to $6.48. Santos reported that its Devil Creek processing plant in Western Australia had produced first gas.The big banks all lost ground, with ANZ down 6? at $20.99, CBA 26? at $49.70, Westpac 23? at $21.46 and NAB down 37? at $24.28.