Miners stumble amid losing streak

THE sharemarket continued its drift lower yesterday, extending its run of losses to three days after Wall Street dropped about 1 per cent overnight on global growth concerns.

By InvestSMART · 27 Sep 2012

By InvestSMART ·
27 Sep 2012

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THE sharemarket continued its drift lower yesterday, extending its run of losses to three days after Wall Street dropped about 1 per cent overnight on global growth concerns.

The materials and energy sectors were a drag, both losing 1.1 per cent, with the large miners among the biggest losers: BHP Billiton and Rio Tinto shed 1.3 per cent and 2 per cent respectively.

The general "risk-off" attitude a response to comments from US Federal Reserve officials that the latest stimulus plan in the US might not boost the economy enough saw local healthcare shares gain ground, with CSL doing particularly well, up 83? at $45.14.

Overall, the benchmark S&P/ASX 200 fell 11.3 points, or 0.3 per cent, to 4361.6.

Analysts said it seemed poor global economic data from recent weeks was starting to feed through to global equity markets, with the situation exacerbated by political tensions in Asia.

Japanese shares fell more than 2 per cent ending at their lowest in more than two weeks with China-related shares hit by a territorial spat that has seen Toyota and Nissan cut output in China. Adding to the losses, more than 150 Japanese stocks went ex-dividend.

Chinese shares also dived, with the Shanghai Composite Index ending 1.4 per cent lower, briefly dipping below 2000 points for the first time since January 2009.

"We're down for three sessions in a row and the seven sessions before that we traded in a tight range around 4400 points," Ord Minnett senior analyst Craig Turton said. "The global economy's actually weakened over the last few months, a lot of the current issues are in the hands of politicians in the US and Europe and the bond-buying announcement in Europe has lessened the urgency of the 'recalcitrant' governments to actually do something.

"So trade around the world has been slowing quite rapidly."

Financial stocks dropped 0.2 per cent, while goldminers lost 0.5 per cent. Defensive stocks, such as health and telecoms, bucked the trend, adding 1.5 per cent and 0.5 per cent respectively.

DuluxGroup fell 4?, or 1.2 per cent, to $3.23 after takeover target Alesco Corporation opened the door for fresh talks over the hostile $210 million bid.

Crown rose 11?, or 1.2 per cent, to $9.10 after it made no changes to its executive pay policy, despite the threat of a board spill in the event of another shareholder backlash.

Incitec Pivot rose 2? to $2.89 after the fertiliser maker put off plans for a new plant in Newcastle.

Nexus Energy remained steady at 12.5? after Seven West Media chief executive and former Woodside boss Don Voelte joined the oil and gas explorer's board. with AAP

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Frequently Asked Questions about this Article…

Why did the ASX/S&P 200 fall yesterday and what drove the three-day losing streak?

The S&P/ASX 200 slipped 11.3 points to 4,361.6, extending a three-day losing run as global growth concerns hit sentiment. Weak international economic data, comments from US Federal Reserve officials that recent stimulus might not be enough, and political tensions in Asia all contributed to a broad risk-off mood that weighed on local markets.

How did major miners like BHP Billiton and Rio Tinto perform and why did miners stumble?

Materials and energy sectors were among the biggest drags, each down about 1.1%. Large miners underperformed with BHP Billiton down about 1.3% and Rio Tinto down about 2%. The weakness was tied to global growth worries and falling demand expectations for commodity-related stocks.

Which sectors and stocks bucked the market weakness and why should investors care?

Defensive sectors outperformed: health stocks rose about 1.5% and telecoms about 0.5%. CSL notably did well, rising to $45.14. For everyday investors, the move highlights how defensive names can hold up when investors adopt a risk-off stance driven by global uncertainty.

How did international markets — especially Japan and China — affect Australian markets?

Japanese shares fell more than 2%, hitting a more-than-two-week low partly after China-related companies cut output amid a territorial spat; over 150 Japanese stocks also went ex-dividend. Chinese shares slid too, with the Shanghai Composite down about 1.4% and briefly dipping below 2,000 points for the first time since January 2009. Those overseas moves added pressure to local equities.

What company-specific news moved stocks on the day?

Several corporate stories influenced individual stocks: DuluxGroup fell to $3.23 after takeover target Alesco opened the door for fresh talks over a hostile $210 million bid; Crown rose to $9.10 after keeping its executive pay policy unchanged despite potential shareholder unrest; Incitec Pivot climbed to $2.89 after delaying plans for a new Newcastle plant; Nexus Energy stayed steady after Don Voelte, former Woodside boss, joined its board.

How did financials and goldminers fare amid the market decline?

Financial stocks dipped about 0.2% and goldminers lost around 0.5%. These sector moves reflected the broader risk-off tone, with investors rotating toward defensive sectors like healthcare and telecoms.

What were analysts saying about trade and economic momentum, and what does that mean for investors?

Analysts noted that recent poor global economic data and slowing trade were starting to show up in equity markets. One senior analyst said the global economy had weakened in recent months and that political factors in the US, Europe and Asia were limiting policymakers' ability to respond—suggesting investors should monitor macro and political headlines as they can quickly shift risk sentiment.

What indicators should everyday investors watch next based on the article's coverage?

Investors should watch global economic data releases, comments from central banks (especially the US Fed), geopolitical developments in Asia, trade indicators and major equity indexes like the Shanghai Composite and Japanese markets. These factors were cited as immediate drivers of market moves and may indicate where sentiment heads next.