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.

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Frequently Asked Questions about this Article…

Why did the S&P/ASX 200 fall and what drove the market lower?

The S&P/ASX 200 fell 11.3 points (about 0.3%) as investors reacted to global growth concerns after Wall Street dropped roughly 1% overnight. Weak global economic data, comments from US Federal Reserve officials about stimulus effectiveness, and political tensions in Asia all contributed to a cautious "risk-off" mood that weighed on Australian shares.

How did major miners like BHP Billiton and Rio Tinto perform during the sell-off?

Large miners were among the biggest losers: BHP Billiton shed about 1.3% and Rio Tinto fell around 2%. The materials and energy sectors each lost about 1.1%, which helped drag the market lower.

Which sectors held up or outperformed during the market weakness?

Defensive sectors outperformed: healthcare stocks rose about 1.5% and telecoms gained roughly 0.5%. Local healthcare names led the gains, with CSL doing particularly well and trading at $45.14 according to the article.

How did global market moves in Asia affect Australian investors?

Asian market weakness intensified local pressure. Japanese shares fell more than 2% and China-related names were hit amid a territorial spat that prompted Toyota and Nissan to cut output in China. The Shanghai Composite dropped 1.4% and briefly dipped below 2,000 points for the first time since January 2009, signaling broader regional strains that can feed into Australian markets.

What happened with DuluxGroup and why did its shares fall?

DuluxGroup fell about 1.2% to $3.23 after takeover target Alesco Corporation opened the door to fresh talks over a hostile $210 million bid. The takeover chatter contributed to the share price move.

Why did Crown shares rise and what was the investor reaction?

Crown rose roughly 1.2% to $9.10 after the company made no changes to its executive pay policy. The decision came despite the threat of a board spill and potential shareholder backlash, and the market reacted positively to the outcome.

Were there any corporate developments investors should note for smaller industrial and energy names?

Yes. Incitec Pivot put off plans for a new fertiliser plant in Newcastle, which coincided with a share rise to $2.89. Also, Nexus Energy remained steady after Seven West Media chief executive and former Woodside boss Don Voelte joined the oil and gas explorer’s board—news that can influence investor sentiment for smaller energy stocks.

What do analysts say about the broader outlook and what investors should watch next?

Analysts highlighted that poor global economic data in recent weeks is beginning to feed through to equity markets and that political developments are exacerbating the situation. They noted global trade is slowing and pointed to the role of policymakers—particularly in the US and Europe—in shaping near-term market direction. Investors should watch upcoming economic data, policy comments from central banks and governments, and regional political tensions that could affect risk sentiment.