Sharp fall on metals markets hits local bourse

THE sharemarket finished lower yesterday, pulling back from a week-long rally.

By InvestSMART · 13 Oct 2011

By InvestSMART ·
13 Oct 2011

Comments

THE sharemarket finished lower yesterday, pulling back from a week-long rally.

The market opened half a per cent weaker after sharp falls on overseas metals markets and a poor start to the US reporting season overnight.

The benchmark S&P/ASX200 index closed 23.3 points, or 0.55 per cent, lower at 4204.3, while the broader All Ordinaries fell 22.4 points, or 0.52 per cent, to 4266.4.

IG Markets analyst Cameron Peacock said the bourse was due for a pullback after the rally during the past week.

But he was optimistic the market wanted to move higher.

"Throughout the day, I noticed that every time we saw a bit of weakness, we'd gravitate back to the 4200 level. That tells me that there is a lot of conviction in the rally," he said.

"Certainly we've got the catalyst for a sustained rally to year end."

Energy stocks fell the most, down 1.1 per cent, despite oil prices rising for the fifth straight session in New York on Tuesday.

Woodside Petroleum fell 23? to $35.36, Santos slipped 17? to $12.49 and Oil Search shed 11? to $5.95.

City Index chief analyst Peter Esho said uranium stocks had helped buoy the resources sector recently on speculation the industry was consolidating.

He said they were now dragging the sector down after uranium producer Energy Resources Australia announced plans to raise $500 million in a discounted issue of $1.53 per share. ERA shares were in a trading halt and last traded at $3.29.

Mining giant BHP Billiton fell 31? to $37.08 after it approved $US1.2 billion in pre-commitment capital for the first phase of the Olympic Dam mine expansion in South Australia.

Fellow miner Rio Tinto lost 54? to $67.46. Fortescue Metals fell 1.9 per cent to $4.72.

Consumer staples and consumer discretionary stocks were among the few sectors to gain ground, with Woolworths up 30? to $24.92.

Consumer electronics chain JB Hi-Fi rose 3.5 per cent, or 49?, to $14.36, despite telling investors at its annual meeting that comparable first quarter sales had dropped 3.5 per cent.

Tabcorp rose 11? to $2.71 after it reported first quarter revenue rose by 2.7 per cent to $759.4 million compared to the same period last year.

Gold closed at $US1666.90 an ounce in Sydney, down $US11.65.

Market turnover was 1.61 billion shares worth $4.46 billion.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What happened to the ASX today and how much did the S&P/ASX200 fall?

The sharemarket finished lower, pulling back after a week-long rally. The S&P/ASX200 closed at 4,204.3, down 23.3 points (0.55%), while the All Ordinaries fell to 4,266.4, down 22.4 points (0.52%).

Why did the market pull back after recent gains?

The market opened about half a percent weaker after sharp falls on overseas metals markets and a soft start to the US reporting season. IG Markets analyst Cameron Peacock said a pullback was due after the recent rally, though he noted the market kept gravitating back to the 4,200 level, suggesting conviction in the rally.

Which sectors led the losses and how did energy stocks perform?

Energy stocks fell the most, down around 1.1% as a group, even though oil prices rose for the fifth straight session in New York. This means energy names underperformed despite firmer oil.

How did major oil and gas companies move on the day?

Several oil and gas stocks fell: Woodside Petroleum traded at $35.36, Santos at $12.49 and Oil Search at $5.95, reflecting weakness across the sector on the day.

What’s going on with uranium stocks and Energy Resources Australia (ERA)?

Uranium shares had recently helped buoy the resources sector, but they weighed on the market after Energy Resources Australia announced plans to raise $500 million via a discounted issue at $1.53 per share. ERA was in a trading halt and was last quoted at $3.29.

How did big miners like BHP, Rio Tinto and Fortescue perform and were there any company updates?

BHP Billiton fell to $37.08 after approving US$1.2 billion in pre‑commitment capital for the first phase of the Olympic Dam expansion. Rio Tinto traded at $67.46, and Fortescue Metals was down to $4.72 (a 1.9% fall).

Which consumer stocks gained and what notable company results were reported?

Consumer staples and discretionary names were among the few gainers: Woolworths rose to $24.92, JB Hi‑Fi moved to $14.36 despite reporting comparable first‑quarter sales were down 3.5%, and Tabcorp climbed to $2.71 after reporting first‑quarter revenue up 2.7% to $759.4 million.

What market indicators should everyday investors note from the session?

Gold closed at US$1,666.90 an ounce in Sydney, down US$11.65, and overall market turnover was 1.61 billion shares worth $4.46 billion—useful measures of market activity and risk appetite for investors monitoring the ASX.