JULIA Gillard's carbon tax plan knocked the wind out of the biggest polluters on the sharemarket yesterday, sending the ASX to close firmly in the red.
The key plank in the federal government's green crusade dominated trade, already weakened by poor overseas leads.
The new tax, coupled with soft US employment figures issued on Friday night and higher than expected inflation data from China, sent the S&P/ASX 200 Index down 72.4 points, or 1.56 per cent, to close at 4582.3.
Energy stocks were among the hardest hit, with the sector shedding 2 per cent.
But Goldman Sachs dealers Andrew Tanner and Ben Barzach said it was hard to find any winners as investors digested the
long-awaited details of the carbon tax.
"Steel stocks were the most visible sign that investors were not entirely happy with the industry outlook in a post-carbon tax world," the pair said in their afternoon note.
BlueScope Steel led the decline, finishing down 9?, or 6.7 per cent, at $1.26, while OneSteel fell 10?, or 4.9 per cent, to $1.93.
Airlines also had a tough time. Qantas tumbled 6.5?, or 3.3 per cent, to $1.935, giving back some of the gains from last week's grounding of Tiger Airways.
The Flying Kangaroo said the proposed carbon plan would cost it $110-115 million in 2012-13 and result in ticket prices rising by about $3.50, depending on the length of the flight.
Global media giant News Corporation backpedalled sharply in response to the latest developments on the phone-hacking scandal at the News of the World.
News Corp's non-voting stock was the second-worst performer on the S&P/ASX 50 Index sandwiched between BlueScope and Qantas dropping 88?,
or 5.4 per cent, to $15.37. The voting stock slumped 85?, or 5 per cent, to $15.92.
The US economy added just 18,000 jobs in June, well below the market consensus of 105,000.
IG Markets strategist Ben Potter labelled yesterday's trade a "perfect storm".
"Everything was flying along before US jobs data stepped off a cliff on Friday," he said. "It just goes to show that markets are still very nervous and how one disappointing economic read can reverse sentiment on a dime."
Friday's bad news from the US on the jobs front extended gold's recent gains. At the close yesterday, the spot price was up $US15.25 at $US1546 an ounce. Gold's strength lifted Newcrest 23? by midday but the stock sagged with the rest of the market to close with a gain of 1? at $38.80.
Frequently Asked Questions about this Article…
Why did the S&P/ASX 200 fall 72.4 points (1.56%) to close at 4582.3?
The sell-off was driven by domestic policy and international economic shocks: the federal government's carbon tax details hit polluting sectors, weak US jobs data (just 18,000 payrolls in June versus a 105,000 consensus) and higher-than-expected inflation in China combined to sap sentiment — a situation IG Markets called a "perfect storm."
How did Julia Gillard's carbon tax plan affect ASX-listed energy and polluting companies?
The carbon tax details hit big polluters hard: the energy sector shed about 2% as investors digested likely higher costs, and other emissions-intensive sectors such as steel and airlines also saw sharp declines as the market priced in a tougher post‑carbon‑tax outlook.
Which steel companies were hardest hit and what were the share moves?
BlueScope Steel led the decline, finishing down about 6.7% at $1.26, while OneSteel fell roughly 4.9% to $1.93 — Goldman Sachs dealers noted steel stocks as a visible sign investors were uneasy about industry prospects after the carbon tax details.
What was the impact of the carbon plan on Qantas and airline tickets?
Qantas shares tumbled about 3.3% to $1.935. The airline estimated the proposed carbon plan would cost it $110–115 million in 2012–13 and could push up ticket prices by roughly $3.50 depending on flight length.
How did News Corporation shares react to the phone‑hacking scandal developments?
News Corporation saw sharp selling: its non‑voting stock fell about 5.4% to $15.37 and the voting stock slipped roughly 5% to $15.92, as the company backpedalled in response to the latest scandal developments.
Did any assets benefit from the market weakness?
Yes — gold extended recent gains amid the risk-off move: the spot price was up US$15.25 at about US$1,546 an ounce, and Newcrest Mining showed strength, closing with about a 1% gain at $38.80.
How important was the US jobs report to the Australian market move?
Very important: the US economy added only 18,000 jobs in June—well below expectations of 105,000—which knocked investor confidence globally and was a key factor amplifying the downturn on the ASX that day.
What should everyday investors learn from this episode of market volatility?
The day illustrated how policy announcements (like a carbon tax) and a single disappointing economic read can rapidly change market sentiment. Investors should be aware that markets can be highly sensitive to political and macroeconomic news and monitor those risks when assessing holdings.
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