May losses put at $100b

MAY was a month many investors would rather forget as heightened worries about Greece and other debt-laden European economies sent sharemarkets and the dollar plunging.

By InvestSMART · 1 Jun 2012

By InvestSMART ·
1 Jun 2012

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MAY was a month many investors would rather forget as heightened worries about Greece and other debt-laden European economies sent sharemarkets and the dollar plunging.

The benchmark ASX200 share index trimmed its losses during the day but still ended about 7.3 per cent lower for May - the worst monthly return since Europe's debt crisis erupted in May 2010.

The index closed down 17.9 points, or 0.44 per cent, at 4076.3 points after being about 1.5 per cent lower at one point. The broader All Ordinaries index fell 15 points, or 0.4 per cent, to 4133.7. The index fell about 7.5 per cent in May, or the equivalent of about $100 billion in market value.

The biggest losers for the month among the major stocks included Aquarius Platinum losing 45 per cent, Whitehaven losing 25 per cent, Toll Holdings losing 21 per cent, OneSteel losing 19 per cent and Fortescue Metals losing 18 per cent. Top gainers for May included Ramsey Health, up 7.7 per cent, News Corp up 6.8 per cent, AGL Energy up 4.7 per cent, Coca-Cola Amatil up 3.2 per cent and CSL up 2.7 per cent.

European shares, meanwhile, opened slightly higher after Wednesday's steep losses, with the FTSEurofirst 300 up 0.4 per cent at 979.65 points, on track for its biggest monthly loss since August when markets were similarly beset by fears over Europe's debt crisis.

The dollar edged back above the US97? level after earlier touching six-month lows on a global retreat to the greenback.

Yields on government debt maturing in two years or longer fell to record lows as a report showed home-building approvals dropped in April, boosting speculation the Reserve Bank will cut its cash rate again when it meets on Tuesday.

"Spain is becoming a huge problem," Derek Mumford, a director in Sydney at Rochford Capital, said. "A lot of money is going to be needed to bail them out. The Aussie [dollar] will inevitably be dragged down to a very important support area at US94.50? to US95?."

The 10-year Australian yield slid below 3 per cent for the first time, to as low as 2.856 per cent, the lowest in data compiled by Bloomberg since 1969. The rate on two-year notes fell to 2.108 per cent, also an all-time low.

ALL ORDS AUSTRALIA

MAY 31

HIGH 4148.7

LOW 4092.5

4133.7

-15.0 (-0.4%)

SOURCE: BLOOMBERG

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Frequently Asked Questions about this Article…

What caused the sharp ASX200 May losses and the broader market sell-off?

Heightened worries about Greece and other debt-laden European economies triggered a global retreat, sending sharemarkets and the Australian dollar plunging. European debt concerns were the main driver of the May sell-off, which pushed local equities sharply lower and pressured investor sentiment.

How much did the ASX200 and All Ordinaries fall in May?

The benchmark ASX200 finished about 7.3% lower for May — its worst monthly return since May 2010. On the day covered, the ASX200 closed at 4,076.3 (down 17.9 points). The All Ordinaries fell about 7.5% in May and lost roughly $100 billion in market value, closing at 4,133.7 on the reported day.

Which ASX-listed companies were the biggest losers for May?

Among major stocks, the worst monthly performers included Aquarius Platinum (down 45%), Whitehaven (down 25%), Toll Holdings (down 21%), OneSteel (down 19%) and Fortescue Metals (down 18%).

Which companies were top gainers on the ASX in May despite the market drop?

Top gainers for May included Ramsay Health (up 7.7%), News Corp (up 6.8%), AGL Energy (up 4.7%), Coca‑Cola Amatil (up 3.2%) and CSL (up 2.7%).

How did bond markets and yields react during the May sell-off?

Yields on Australian government debt fell to record lows amid the risk-off move. The 10‑year Australian yield slid below 3% to as low as 2.856% — its lowest level in Bloomberg data since 1969 — and the two‑year yield fell to 2.108%, also an all‑time low.

Did falling yields affect expectations for Reserve Bank interest rates?

Yes. Falling yields and weaker home‑building approvals for April boosted speculation that the Reserve Bank of Australia might cut its cash rate again at its upcoming meeting, according to the article.

What happened to the Australian dollar during the market turmoil?

The Australian dollar earlier touched six‑month lows amid the global retreat to the US dollar, then edged back up above roughly US$0.97 as markets stabilised slightly during the trading session covered.

How were European markets performing while Australia was plunging?

European shares opened slightly higher after steep losses the previous day, with the FTSEurofirst 300 up about 0.4% at 979.65 points — but still on track for its biggest monthly loss since August amid similar fears over Europe’s debt crisis.