Shares fall as investors await outcome of Fed meeting

THE sharemarket ignored positive offshore leads to close sharply lower amid renewed concerns about the euro zone debt crisis.

By InvestSMART · 20 Sep 2011

By InvestSMART ·
20 Sep 2011

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THE sharemarket ignored positive offshore leads to close sharply lower amid renewed concerns about the euro zone debt crisis.

The benchmark S&P/ASX 200 index fell 67.9 points, or 1.64 per cent, to 4081.5, while the broader All Ordinaries index fell 65.8 points, or 1.56 per cent, to 4164.1.

The market opened about 1 per cent lower, bucking a positive lead from Wall Street, due to concerns about a decision by European leaders to delay a vote until next month on an ?8 billion ($10.8 billion) bailout loan.

Ian Merrick, an equities consultant at Ord Minnett, said the US lead had been unconvincing, given how much uncertainty surrounded the implications of a Greek default.

He said local trading volumes had been light, with several investors sitting on the sidelines in anticipation of the US Federal Open Market Committee two-day meeting beginning today, in which a stimulus package could be announced. Turnover was 1.74 billion shares changing hands for $3.79 billion.

Losses were reported across all sectors, with about eight of every 10 stocks falling.

The energy sector took the brunt of the downward trend, falling 2.6 per cent as a result of weaker offshore commodity prices.

Woodside Petroleum closed down 85?, or 2.48 per cent, at $33.40 and Santos ended the day 20?, or 1.75 per cent, weaker at $11.25.

Financial stocks were also hit, tainted by investor uncertainty about local banks' exposure to euro zone debt risk.

The big four banks fell, with Commonwealth Bank down 63? at $44.95, Westpac 41? lower at $19.51. ANZ losing 39? to $19.41 and National Australia Bank shedding 42? to $22.44.

Hearing implant manufacturer Cochlear was the best performer on the ASX 100, up 5.7 per cent, or $2.90, at $54.10.

News Corp and Fairfax Media were among the few stocks trading in positive territory. News Corp was up 24?, or 1.5 per cent, at $16.20, and Fairfax rose by 0.5? to81.5?.

Gold stocks gained, with the nation's biggest miner, Newcrest, up 6? at $38.17. The closing price of gold in Sydney was $US1823.70 per fine ounce, up $US57.81.

The worst performing stock on the ASX 100 was surfwear company Billabong, which dived 7.6 per cent to $3.03 after going ex-dividend.

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Frequently Asked Questions about this Article…

Why did the ASX fall sharply today and how much did the ASX 200 drop?

The ASX fell amid renewed concerns about the euro‑zone debt crisis and uncertainty ahead of the US Federal Open Market Committee meeting. The benchmark S&P/ASX 200 dropped 67.9 points, or about 1.64%, to 4,081.5, while the All Ordinaries fell around 1.56% to 4,164.1.

What role did euro‑zone bailout news play in today's market movement?

Markets reacted to European leaders delaying a vote until next month on an €8 billion bailout loan, which increased investor uncertainty about euro‑zone debt risk and weighed on local share prices despite positive leads from Wall Street.

Which sectors led the declines on the ASX and why?

Losses were broad‑based, but the energy sector took the biggest hit — down about 2.6% — mainly because of weaker offshore commodity prices. Financial stocks were also hit as investors worried about banks' exposure to euro‑zone debt.

How did major energy companies like Woodside and Santos perform?

Energy majors retreated on the weaker commodity backdrop: Woodside Petroleum closed at $33.40 (down) and Santos ended the day at $11.25 (weaker), reflecting the sector's sharp decline.

What happened to Australia’s big four banks during the sell‑off?

The big four banks fell on investor concern about euro‑zone exposure. Commonwealth Bank closed at $44.95, Westpac at $19.51, ANZ at $19.41 and National Australia Bank at $22.44 — all finishing lower on the session.

Were there any notable winners on the ASX despite the broad sell‑off?

Yes — hearing‑implant maker Cochlear was the best performer on the ASX 100, up 5.7% to $54.10. Media names such as News Corp also traded in positive territory (News Corp was up about 1.5% to $16.20) and Fairfax was slightly higher.

How did gold and major miners perform amid the market turmoil?

Gold stocks gained, with Newcrest (the nation's biggest miner) up about 6% to $38.17. The closing price of gold in Sydney was US$1,823.70 per fine ounce, up US$57.81.

What were trading volumes and what should everyday investors watch next?

Turnover was relatively light at 1.74 billion shares trading for about $3.79 billion, as many investors sat on the sidelines. Everyday investors should watch the outcome of the US Federal Open Market Committee meeting for possible stimulus announcements and any further developments on the euro‑zone bailout vote.