Battle-weary investors were again hit by global headlines yesterday, this time from the Korea.
BATTLE-WEARY investors were again hit by global headlines yesterday, this time from the Korean peninsula.
The main Asian markets lost ground, with Japan's Nikkei 225 retreating 1.26 per cent and Hong Kong's Hang Seng slipping 1.18 per cent.
The Australian market was one of the worst performers, with the S&P/ASX 200 Index dropping 98.8 points, or 2.4 per cent, to 4060.4.
Only South Korea's Kospi Index, which fell 3.4 per cent, was harder hit.
''Kim Jong-il's death is the latest spanner in the works,'' said IG Markets market strategist Stan Shamu. ''Although a succession plan was already in place, change means uncertainty and uncertainty is not good for markets.''
Even before news of the dictator's death reached the market, the week had got off to a poor start after the business commentator Alan Kohler said he would reduce his exposure to equities, fearing a looming panic selloff on the sharemarket.
''I don't know when it will happen and it is not a certainty that it will happen ? but I think the risk is now such that you must take action,'' Mr Kohler wrote in his influential Week in View.
''On Monday I will be significantly reducing my already reduced exposure to equities, possibly to zero.''
Woodside Petroleum dragged energy stocks lower on signs that work on a gas processing plant in Western Australia's north might not proceed. The company had already delayed making a decision on a $30 billion gas project in the state's Browse Basin so investors pummelled the stock, sending it down $1.06, or 3.4 per cent, to $30.24.
BHP Billiton lost 87?, or 2.5 per cent, to $34.32 while Rio Tinto lost $1.60, or 2.6 per cent, to $60.20.
Billabong shares plunged 44.2 per cent after the company warned that its first-half profit could fall by as much as 26 per cent. The Australian surfwear manufacturer said earnings before interest, tax, depreciation and amortisation would be between $70 million and $75 million for the six months to December 31, down from $94.6 million in the previous corresponding period. Billabong shares closed down $1.61 at $2.03.
The big four banks all lost ground, with Commonwealth falling 84?, or 1.7 per cent, to $48.29, and Westpac losing 46?, or 2.2 per cent, to $20.05.
The dollar fell almost half a US cent, ending the day on US99.24?, down from US99.70? on Friday.
European stocks opened lower but last night were up about 0.5 per cent, with US futures also in positive territory.
Frequently Asked Questions about this Article…
How did North Korea headlines affect global markets and investor sentiment?
News from the Korean peninsula, including reports around Kim Jong‑il's death, sparked fresh uncertainty and sent Asian markets lower. Japan's Nikkei 225 fell about 1.26%, Hong Kong's Hang Seng slipped about 1.18%, and South Korea's Kospi dropped roughly 3.4%. Market strategists cited succession uncertainty as a key driver of investor fear.
How badly did the Australian share market (ASX 200) fall after the North Korea news?
The S&P/ASX 200 declined 98.8 points, or about 2.4%, to finish at 4,060.4 — making Australia one of the worst‑performing markets on the day as investors responded to the geopolitical headlines and weaker regional sentiment.
What happened to energy stocks like Woodside Petroleum in the market sell‑off?
Woodside Petroleum weighed on energy stocks after signs that work on a gas processing plant in Western Australia's north might not proceed and after it delayed a decision on a reported $30 billion Browse Basin gas project. Investors punished the stock, which fell $1.06 (about 3.4%) to $30.24.
How did major miners and resources companies react in the sell‑off?
Large miners were down on the day: BHP Billiton fell about 2.5% to $34.32 and Rio Tinto slipped about 2.6% to $60.20, reflecting the broader risk‑off mood among investors.
Why did Billabong shares plunge and what was the company’s profit outlook?
Billabong shares plunged about 44.2% after the surfwear maker warned first‑half profit could fall by as much as 26%. The company said EBITDA for the six months to December 31 would be between $70 million and $75 million, down from $94.6 million in the prior corresponding period.
How did the big four Australian banks perform during the market drop?
All of the big four banks lost ground amid the market weakness. For example, Commonwealth Bank fell about 1.7% to $48.29 and Westpac lost about 2.2% to $20.05, reflecting the broad risk‑off sentiment.
Did currency and international markets move with the sell‑off?
Yes. The Australian dollar fell nearly half a US cent, ending the day at about US99.24c down from around US99.70c. European stocks initially opened lower but later were up roughly 0.5%, and US futures were trading in positive territory overnight.
What were market commentators saying about how investors should respond to the geopolitical uncertainty?
Market commentators highlighted the role of uncertainty: IG Markets strategist Stan Shamu said Kim Jong‑il's death was 'a spanner in the works' because succession brings uncertainty, and business commentator Alan Kohler said he would reduce his equity exposure, even possibly to zero, citing the risk of a panic sell‑off. These views helped frame the day’s risk‑off trading.
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