Market weakens as debt worries linger

THE sharemarket closed half a per cent weaker yesterday amid renewed worries about European debt.

By InvestSMART · 16 Nov 2011

By InvestSMART ·
16 Nov 2011

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THE sharemarket closed half a per cent weaker yesterday amid renewed worries about European debt.

At the close, the benchmark S&P/ASX 200 Index was down 19 points, or 0.44 per cent, at 4285.6.

RBS Morgans director of equities Bill Chatterton said the Australian shares performed marginally better than US stocks, which fell in overnight trading.

"Overall, instability of Europe is still a concern and how it plays out is hard to know," Mr Chatterton said.

"A new leader in Italy adds a bit more substance."

Concerns over Italy's borrowing costs continued to weigh on the local market.

The largest decline on the S&P/ASX 20 was posted by BHP Billiton, which fell 62?, or 1.7 per cent, to $36.88.

Commonwealth Bank slipped 71?, or 1.4 per cent, to $49.15.

CBA said cash earnings for the first three months of the financial year were about $1.75 billion, putting it on track to equal or better last year's record profit.

Among the other banks National Australia Bank was 4? lower at $24.52, Westpac was 4? higher at $21.09 and ANZ was 4? higher at $20.70.

Retail stocks were hit hard, with JB Hi-Fi ending 32?, or 2 per cent, weaker at $16.10, while Westfield shares were 20? lower at $8.05.

Ramsay Health Care was down 37? at $19.42 after it said Europe's financial turmoil could inflict some pain on its fledgling private hospital business on the continent, but the company remained committed to expanding there.

The federal government's move to lift a ban on uranium sales to India boosted uranium stocks, but share prices are still well below the levels before the Fukushima nuclear crisis.

Paladin, which operates the Langer Heinrich mine in Namibia, was up 5.5?, or 3.4 per cent, at $1.665 but its share price is 65 per cent weaker than its finish of $4.83 on March 10.

Fellow uranium explorer Toro Energy was up 1?, or 13 per cent, at 8.7?, and Extract Resources was up 13?, or 1.7 per cent, at $7.83, compared with its March 10 closing price of $10.50.

Wall Street was weaker as market players noted the Italian government's high cost of borrowing funds on global markets.

An auction of Italian government five-year bonds went at a yield of 6.29 per cent, the highest rate since 1997.

The spot price of gold in Sydney was $US1772 an ounce, down $US210.89 from $US1792.89 on Monday.

On the Australian market, national turnover was 1.68 billion shares worth $4.1 billion, with 417 stocks up, 552 down and 385 unchanged.

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Frequently Asked Questions about this Article…

What happened to the Australian sharemarket today and how big was the move on the S&P/ASX 200?

The Australian sharemarket closed weaker as renewed worries about European debt weighed on sentiment. The S&P/ASX 200 was down 19 points, or about 0.44%, finishing at 4,285.6.

Why are European debt concerns affecting ASX stocks and should investors worry?

Instability in Europe — especially concerns about Italy’s high borrowing costs — has global spillover effects. Analysts noted that uncertainty in Europe pushed Wall Street and local markets lower; an Italian five‑year bond auction yielded 6.29%, the highest since 1997. Everyday investors should watch macro risk from Europe because it can drive short‑term volatility in Australian shares.

Which large ASX stocks were hit today and what were the notable price moves?

Among the biggest moves, BHP Billiton fell about 1.7% to $36.88 and Commonwealth Bank slipped about 1.4% to $49.15. Retail names were weaker too: JB Hi‑Fi closed about 2% lower at $16.10 and Westfield shares were weaker at $8.05. Ramsay Health Care also fell to $19.42 amid concerns about its European operations.

How did the major banks perform and what did Commonwealth Bank report on earnings?

Bank moves were mixed: National Australia Bank, Westpac and ANZ had small moves around the session, while Commonwealth Bank reported cash earnings of about $1.75 billion for the first three months of the financial year — putting it on track to equal or better last year’s record profit.

What happened to uranium stocks after the government lifted the uranium ban to India?

The federal government’s decision to lift a ban on uranium sales to India boosted uranium stocks, although prices remain well below pre‑Fukushima levels. For example, Paladin (operator of Langer Heinrich) rose to $1.665 but is still about 65% below its March 10 finish of $4.83. Extract Resources was trading at $7.83 compared with $10.50 on March 10.

How is Ramsay Health Care being affected by Europe and what should investors consider?

Ramsay Health Care said Europe’s financial turmoil could inflict some pain on its fledgling private hospital business there, though the company remains committed to expanding on the continent. Investors should consider the company’s European exposure when assessing risk and weigh that against its growth plans.

What happened to gold prices today and how might that matter to investors?

The spot price of gold in Sydney was US$1,772 an ounce, compared with US$1,792.89 on Monday. Moves in gold can reflect risk sentiment and safe‑haven demand, so investors often watch gold alongside equity volatility.

What was market breadth and turnover on the ASX today — how many stocks rose or fell?

National turnover was 1.68 billion shares worth about $4.1 billion. On the day 417 stocks rose, 552 fell and 385 were unchanged, indicating more decliners than advancers in the broader market.