Markets dips ahead of inflation data, Europe meeting

THE sharemarket slipped 0.6 per cent yesterday, after the previous day's 2.6 per cent jump, as traders awaited two announcements due today.

By InvestSMART · 26 Oct 2011

By InvestSMART ·
26 Oct 2011

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THE sharemarket slipped 0.6 per cent yesterday, after the previous day's 2.6 per cent jump, as traders awaited two announcements due today.

The benchmark S&P/ASX200 index closed down 27.1 points, or 0.64 per cent, at 4227.9, while the broader All Ordinaries fell 25.9 points, or 0.6 per cent, to 4287.7.

The CommSec analyst Tom Piotrowski said the market was becoming more realistic about outcomes in Europe but things were moving in the right direction. The fall in the local market yesterday "looks like a bit of a disappointment given the US markets had a strong night and the picture in the US is looking more encouraging," he said.

"The markets are really waiting on two key outcomes." These were local inflation numbers and the second meeting of European leaders about the sovereign debt crisis.

Mr Piotrowski said there had initially been optimism about the European bailout package but that had eased somewhat.

The resources sector fared well in a falling market yesterday, led by Rio Tinto , which rose $1 to $66.63. BHP closed up 32? at $37.17.

The big four banks all slipped back. Commonwealth fell 6? to $48.72, ANZ 16? at $21.55, NAB 27? to $24.67 and Westpac 16? to $22.

Foster's said consumers remained hesitant because of global economic concerns but it expected beer sales to improve once economic uncertainty was resolved. The brewer, which is in the process of being bought by global beverage maker SABMiller, fell 1? to $5.30.

Pacific Brands fell 3.5? to 59.5? after shareholders rejected the remuneration package for the management of the clothing and linen producer. Surfing brand Billabong International jumped 31? to $3.91 after saying it was on track for strong earnings growth this year.

The medical equipment maker ResMed said currency exchange movements had led to an 11 per cent fall in its first quarter profit. The shares slumped 39?, or 13 per cent, to $2.61, making the stock the worst performer among the top 200 stocks.

The best performer was Mirabela Nickel, which jumped 13?, or 9.5 per cent, to $1.50 after saying third quarter sales and production of nickel were at record levels.

The price of gold was $US1658.15 per ounce, up $US4.30.

National turnover was 1.84 billion shares worth $4.67 billion. AAP

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Frequently Asked Questions about this Article…

Why did the ASX slip 0.6% yesterday and what were investors waiting for?

The sharemarket fell 0.6% as traders paused ahead of two key announcements: local inflation data and the second meeting of European leaders about the sovereign debt crisis. The S&P/ASX200 closed down 27.1 points at 4,227.9 and the All Ordinaries fell to 4,287.7. CommSec analyst Tom Piotrowski said markets were becoming more realistic about Europe and were waiting on those outcomes.

How did the resources sector perform on the day and which miners led the gains?

The resources sector held up well in a softer market, led by Rio Tinto and BHP. Rio Tinto rose $1 to $66.63 and BHP closed up about 32 cents at $37.17, helping to offset weakness elsewhere on the ASX.

What happened to the big four banks on the ASX that day?

The big four banks all slipped back on the day. Commonwealth Bank fell to $48.72, ANZ to $21.55, NAB to $24.67 and Westpac to $22. The banking sector's pullback contributed to the overall market decline.

Why did ResMed shares fall and how significant was the drop?

ResMed said currency exchange movements caused an 11% fall in its first-quarter profit. The stock reacted sharply — the shares slumped about 13% to $2.61, making ResMed the worst performer among the top 200 stocks that session.

Which companies had notable company-specific news affecting their share prices?

Several companies reported news that moved their shares: Foster's said consumers remained cautious amid global economic concerns and is in the process of being acquired by SABMiller (Foster's fell to $5.30). Pacific Brands fell after shareholders rejected its executive remuneration package. Billabong International jumped after saying it was on track for strong earnings growth, and Mirabela Nickel rose after reporting record third-quarter nickel sales and production.

What was the day's trading volume and market turnover on the ASX?

National turnover for the day was 1.84 billion shares, worth about $4.67 billion, according to the report — a useful measure of overall market activity.

How did commodities such as gold perform during the trading session?

Gold was trading at US$1,658.15 per ounce, up about US$4.30 on the day, reflecting modest gains in the precious metals market amid broader market movements.

How are global events — like the European debt talks and US market moves — influencing local Australian investors?

Global developments are clearly shaping sentiment on the ASX. The article notes that while US markets looked encouraging overnight, Australian traders were cautious as optimism about a European bailout package had eased. Investors were closely watching the European leaders' meeting and local inflation figures for clearer direction.