Poor retail figures join eurozone in dragging down market

THE sharemarket has closed lower in the wake of weak retail trade data, reports that China's government may not stimulate economic growth as much as hoped for and continued worries about the eurozone.

By InvestSMART · 31 May 2012

By InvestSMART ·
31 May 2012

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The benchmark S&P/ASX200 index fell 20.2 points, or 0.5 per cent, to 4094.2, while the broader All Ordinaries index fell 19.5 points, or 0.5 per cent, to 4148.7.

IG Markets market strategist Stan Shamu said several factors were behind the fall on the local stock exchange yesterday.

"But the over-arching theme is that there's just no confidence out there," he said.

Spain was overtaking Greece as the main worry in the eurozone, with investors focused on plans to recapitalise Spain's ailing banks, he said.

Also, China's state-run Xinhua news agency had reported the government did not plan to introduce economic stimulus measures on the same scale it did in 2008. "That really did take the wind out of the sails of the resources sector," Mr Shamu said. "We also had the retail sales figures coming through weaker than expected."

The Australian Bureau of Statistics reported a 0.2 per cent fall in retail spending last month, compared with economists' forecasts of an increase of 0.2 per cent.

In the resources sector, global miner BHP Billiton fell 20? to $32.17, and Rio Tinto fell 79? to $57.35.

Among the major banks, Westpac fell 13? to $20.42, National Australia Bank rose a cent to $23.82, ANZ rose 3? to $20.97, and Commonwealth Bank declined 14? to $49.74.

In the retail sector, department store owner David Jones fell 5? to $2.25, and Myer lost a cent to fall to $1.98.

Wesfarmers declined 6? to $28.95 after it said it plans to increase the size of its Coles supermarkets as it continues its battles with Woolworths.

Among other stocks, casino operator Crown lost 5? to $8.53 after James Packer started lobbying for former Victorian premier Jeff Kennett to take Echo Entertainment's chairman John Story's spot on the board. Echo declined a cent to $4.34.

Fairfax Media was 0.5? lower at 66.5? after the troubled media company announced 66 local jobs would be moved to New Zealand.

Facilities management firm Programmed Maintenance Services rose 8? to $2.38 after the company almost tripled its profit in the past 12 months.

Preliminary national turnover was 1.49 billion shares worth $3.56 billion, with 524 stocks down, 416 up and 354 unchanged.

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Frequently Asked Questions about this Article…

Why did the Australian sharemarket close lower today?

The ASX closed lower after a mix of weak domestic retail data, concerns about reduced Chinese stimulus and ongoing eurozone worries. The S&P/ASX 200 fell 20.2 points (0.5%) to 4094.2 and the All Ordinaries fell 19.5 points (0.5%) to 4148.7. IG Markets strategist Stan Shamu said the overarching theme was a lack of confidence among investors.

How did Australia’s retail sales figures affect investor sentiment and the market?

The Australian Bureau of Statistics reported retail spending fell 0.2% last month versus economists’ forecast for a 0.2% increase. That weaker-than-expected reading dented confidence and contributed to the broader market weakness reported in the session.

What impact did China’s stimulus plans have on Australian resource stocks?

State-run Xinhua reported China did not plan stimulus on the same scale as 2008, which removed some support from the resources sector. As a result, global miners such as BHP Billiton and Rio Tinto fell, with BHP quoted at $32.17 and Rio Tinto at $57.35 in the report.

How did the major Australian banks perform in this session?

Bank stocks were mixed: Westpac fell to $20.42, National Australia Bank edged up a cent to $23.82, ANZ rose to $20.97, and Commonwealth Bank declined to $49.74, according to the article’s trading roundup.

What happened to retail and supermarket-related stocks and why should investors care?

Department-store owners fell after the weak retail print—David Jones was down to $2.25 and Myer to $1.98. Wesfarmers declined to $28.95 after announcing plans to increase the size of its Coles supermarkets as it continues to compete with Woolworths. These moves highlight how sector news and strategy changes can quickly affect retail stocks.

Were there any company-specific headlines that moved stock prices today?

Yes. Casino operator Crown dropped to $8.53 after reports James Packer lobbied for Jeff Kennett to replace Echo Entertainment’s chairman; Echo eased to $4.34. Fairfax Media was about 0.5% lower at 66.5 after announcing 66 local jobs would be moved to New Zealand. Programmed Maintenance Services rose to $2.38 after nearly tripling its profit over the past 12 months.

What was the market breadth and turnover for the trading day?

Preliminary national turnover was 1.49 billion shares worth $3.56 billion. Market breadth showed 524 stocks down, 416 up and 354 unchanged, indicating more decliners than advancers on the session.

What key signals should everyday investors watch after this trading session?

Based on the article, everyday investors should monitor upcoming domestic economic reads like retail sales, developments on China’s stimulus stance, and eurozone banking news (especially related to Spain). Also watch company-specific updates—earnings, strategy changes and boardroom moves—that can drive individual stock volatility.