Retail, banking sectors drag market down
STRUGGLING retail and banking sectors dragged the sharemarket into the red yesterday amid persistent concerns about debt problems in the US.
STRUGGLING retail and banking sectors dragged the sharemarket into the red yesterday amid persistent concerns about debt problems in the US.A forecast dip in sales for retailer David Jones and fears of a downgrade in the US's credit rating added to the market's woes.Yesterday the benchmark S&P/ASX 200 Index was down 24.1 points, or 0.53 per cent, to 4490.7.Platypus Asset Management portfolio manager Prasad Patkar said the combination of domestic and global economic worries had triggered nerves among investors. The consumer discretionary sector fell 2.18 per cent yesterday while the financials index dropped 1.15 per cent.David Jones said an unprecedented and rapid deterioration in trading conditions had forced it to cut its sales and profit guidance. The retailer's stocks dropped by 18.2 per cent yesterday to $3.20 after the company's announcement on Wednesday night.Mr Patkar expected the market would remain volatile in coming weeks with investors concerned the US would default on its loans."It's considered a low probability but a high-impact outcome," he said. "People still believe they will raise their debt ceiling after a bit of fencing and horse trading."US President Barack Obama has begun negotiations with Republicans to increase the country's debt limit by August 2 to ensure its bills can be paid.However, The Wall Street Journal reported yesterday that ratings agency Moody's was reviewing its rating for the US, citing fears it may run out of money.Mr Patkar said a default by the US could have disastrous consequences for equity markets across the globe.Yesterday the materials sector inched up 0.34 per cent while energies climbed 0.24 per cent.Mining heavyweight BHP Billiton fell 3? to $43.60 and Rio Tinto closed flat at $80.95. David Jones's rival Myer also lost ground yesterday, shedding 17?, or 6.42 per cent, to $2.48, while Westfield Group lost 20?, or 2.32 per cent, to close at $8.42.The big four banks finished lower.Commonwealth Bank shed 58? to $49.02, NAB dropped 30? to $23.46, Westpac lost 37? to $20.77 and ANZ gave up 18? to $20.98.The spot price of gold was $US1585.30 an ounce shortly before 5pm yesterday, up $US16.25 on Wednesday's close.Goldminer Newcrest Mining was among the leading movers yesterday rising 84? to $39.80.