Negative offshore data leaves market in the red

THE sharemarket followed negative leads from overseas to edge lower after disappointing economic data from debt-riddled Europe.

By InvestSMART · 24 Feb 2012

By InvestSMART ·
24 Feb 2012

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THE sharemarket followed negative leads from overseas to edge lower after disappointing economic data from debt-riddled Europe.

The benchmark ASX 200 index was down 6.9 points, or 0.16 per cent, at 4286.2, while the broader All Ordinaries fell 4.6 points to 4367.5.

The March share price index futures contract closed 13 points weaker at 4260 on a volume of 23,407 contracts.

The IG Markets strategist, Stan Shamu, said soft manufacturing and services data from Europe dampened risk sentiment among investors. It came hot on the heels of disappointing export and manufacturing data from China a day earlier.

"Investors are still hesitant ... due in part to persistent concerns about how bad things can go in Europe, and partly due to uncertainty on how China will manage in its attempt to engineer a soft landing," Mr Shamu said.

Energy stocks rose after oil prices jumped to nine-month highs, driven by concerns about Iran's suspected nuclear weapons activities.

Shares in Oil Search rose 11? to $7.07 while Woodside rose $1.22, or 3.3 per cent, to $38.08.

Origin was up 26? at $14.05 after the integrated energy company posted a half-yearly net profit of $794 million, compared to a $136 million loss for the previous corresponding period.

Among other companies reporting results yesterday, David Jones reported a 3.1 per cent fall in sales in the December quarter to $598.5 million. The company's shares fell 2? to $2.55.

Insurance Australia Group's first-half profit fell by 10.6 per cent as insurance claims exceeded allowances but the company upgraded its forecast for full-year revenue growth. The report was well received, with the stock surging 24?, or 8.28 per cent, to $3.14.

The Fairfax Media chief executive, Greg Hywood, said difficult trading conditions were expected to continue as the company reported lower first-half profits and continued its transformation. The shares dipped 0.5? to 82?.

In other news, about 330 jobs may be at risk at BHP Billiton's Tasmanian manganese alloy plant as it reviews the 50-year-old operation. BHP fell 18? to $36.23 while rival Rio Tinto fell $1.02 to $67.51.

Banks were lower, with National Australia Bank down 24? at $23.21.

Steel maker and miner OneSteel surged for a third consecutive day after its first-half results, in which it flagged an improved second-half result and job cuts following a $74 million interim net loss The shares rose 20?, or 21.05 per cent, to $1.15.

The spot price of gold in Sydney was trading at $US1773.50 an ounce, up $US17.25.

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Frequently Asked Questions about this Article…

Why did the ASX 200 fall today and what were the index moves?

The ASX 200 followed negative overseas leads, slipping after disappointing economic data from Europe and soft Chinese export/manufacturing figures. The benchmark ASX 200 was down 6.9 points (about 0.16%) at 4,286.2, the All Ordinaries fell to 4,367.5, and the March futures contract closed 13 points weaker at 4,260.

How did global economic data from Europe and China affect Australian sharemarket sentiment?

Soft manufacturing and services data from Europe, together with weaker export and manufacturing data from China, dampened investor risk appetite. IG Markets strategist Stan Shamu said investors remained hesitant because of concerns about how bad things could get in Europe and uncertainty over China’s attempt to engineer a soft landing.

How did rising oil prices influence energy stocks on the ASX?

Oil jumped to nine‑month highs on concerns about Iran’s suspected nuclear weapons activities, which lifted energy stocks. For example, Oil Search rose to about $7.07, Woodside gained $1.22 (around 3.3%) to $38.08, and integrated energy company Origin was stronger after reporting positive results.

What were the key corporate earnings and results that moved individual stocks?

Origin posted a half‑year net profit of $794 million (compared with a $136 million loss a year earlier) and its shares rose to $14.05. Insurance Australia Group’s first‑half profit fell 10.6% but it upgraded its full‑year revenue growth forecast and the stock surged to $3.14. David Jones reported a 3.1% fall in December‑quarter sales to $598.5 million and its shares fell to $2.55. Fairfax Media reported lower first‑half profits and its shares dipped slightly.

Why did OneSteel shares surge and what did its half‑year result show?

OneSteel rallied for a third straight day after reporting first‑half results that included a $74 million interim net loss, but the company flagged an improved second half and announced job cuts — news that sent its shares up to $1.15 (about a 21% move).

Are there job risks at BHP Billiton’s Tasmanian plant and how did resources stocks trade?

Yes — about 330 jobs may be at risk as BHP Billiton reviews its 50‑year‑old Tasmanian manganese alloy plant. BHP’s shares fell to $36.23 and rival Rio Tinto’s shares fell to $67.51 on the day.

How did Australia’s banks fare in the session?

Banks were weaker during the session; National Australia Bank was specifically mentioned as trading lower, at $23.21.

What happened to gold prices and where was the spot price trading?

Gold strengthened during the session: the spot price of gold in Sydney was trading at US$1,773.50 an ounce, up US$17.25.