Resources on nose as messy euro endplay looms
A SHARP fall in resource stocks pushed the market to a two-month low yesterday, on intensifying worries of a possible messy Greece exit from the eurozone and its impact on the global economy.
A SHARP fall in resource stocks pushed the market to a two-month low yesterday, on intensifying worries of a possible messy Greece exit from the eurozone and its impact on the global economy.The benchmark S&P/ASX200 index fell 100.8 points, or 2.4 per cent, to 4165.5, while the broader All Ordinaries fell 101.6 points, or 2.4 per cent, to 4214.7.Since the beginning of May, the sharemarket has lost more than $75 billion in value amid fears of another escalation in Europe's debt crisis.After six rounds of fruitless wrangling, Greece abandoned efforts to form a government and called a new election that some investors fear may hand victory to the leftists, undo the country's bailout package, and push it closer to bankruptcy and out of the eurozone. Greek political leaders are due to meet tonight to establish a caretaker government before a second election in just over a month.The dollar also suffered, falling to US98.85?, its lowest this year, as investors fled riskier assets. "It's just a general bout of risk aversion around the globe," says Rochford Capital director Derek Mumford. "It's not just Greece, it's the whole European situation. The Aussie is certainly under pressure."Mr Mumford predicts the currency will drop as low as US97.5? within the next couple of weeks.The sharemarket's falls were broad-based with utilities the only winner, albeit marginally.IG Markets analyst Stan Shamu said an exit by Greece from the eurozone could lead to a prolonged period of uncertainty on the European front."It would cost them a lot of money, cause a lot of instability in the region," Mr Shamu said. "Investors are running scared, there's a widespread sell-off, particularly in resources."There was a run of cash out of European banks, with bond yields rising, particularly in Spain, meaning confidence in the region was falling.The only positives were short sellers - investors who bet on stocks falling - were winning and value could be found quality stocks such as BHP Billiton and Rio Tinto, Mr Shamu said.BHP closed at a three-year low, down $1.37, or 4.05 per cent, at $32.49. Rio lost $2.32, or 3.85 per cent, to $57.99 and iron ore miner Fortescue Metals fell 26?, or 5.1 per cent, to a four-month low at $4.84. Australia's largest listed oil and gas player, Woodside Petroleum, shed $1.08 to $31.72 and Santos retreated 27 cents to $12.28.The banks all lost ground, with the Commonwealth down 89? at $51.77, ANZ 50? to $51.61, Westpac 22? to $21.68 and National Australia Bank closing 27? lower at $24.40.Toll Holdings shares slumped 15 per cent to $4.73 after the transport and logistics group flagged lower earnings because of weaker demand from the struggling retail sector.Industrea shares jumped by 43 per cent to $1.23 after General Electric announced a takeover of the mining services group. Shares in CSR slipped 1.5 per cent after the building products maker recorded a slight increase in net profit for the year to $90.7 million, but expected challenging conditions in the housing construction industry to continue.with agenciesALL ORDS AUSTRALIA MAY 16HIGH 4316.3LOW 4214.74214.7101.6 (-2.4%)SOURCE: BLOOMBERG