Softer Asian markets take the shine off local bourse
For the week, the benchmark S&P/ASX200 slipped 1.8 points, at 4972.1 points, while the broader All Ordinaries index rose 1.9 points at 4959.4 points.
On Friday morning, market watchers said global sentiment had been broadly positive after Thursday night's rally on US markets.
The S&P 500 had reached a record high and European equities also rallied. The optimism even spread to the Portuguese bond market as political negotiations continued there.
"US data printed on the strong side, the European Central Bank relaxed some collateral rules, and the second leg of US Federal Reserve chairman [Ben] Bernanke's testimony to Congress did not upset the mood," Westpac strategist Sean Callow wrote, referring to the mood on Friday morning.
The local market rose above 5000 points in early trade on Friday, boosted by the gains on Wall Street that took US stocks to record highs.
But selling took hold from late morning as other markets in the region lost ground.
Japan's market posted the largest falls amid talk of a rise in sales tax and an upper house election to be held on the weekend.
Market watchers will be keeping an eye on the G20 meeting this weekend. Global finance ministers and central bank governors will meet in Moscow. A joint communique is due on Saturday.
"One of the topics under discussion will be the spillover impact of a potential US Federal Reserve reduction in stimulus," Mr Callow said.
"South Korea has been among those worried about spillover increases in its yields as a result of a rise in US Treasury yields, while the European Central Bank and Bank of England have also declared the impact unwelcome, without admitting it was driven by US Fed expectations."
For the week, Billabong International rose 17¢, or 74 per cent, to 40¢, as investors cheered a refinancing deal that will keep the troubled retailer solvent.
BHP Billiton rose 55¢, or 1.7 per cent, to $33.86. Its shareholders could be in for a cash bonanza after the heavyweight miner posted record production numbers in a year in which it also slashed billions of dollars in spending.
Insurance Australia Group slipped 7¢, or 1.2 per cent, to $5.85, despite saying that fewer than expected insurance claims in the 2012-13 financial year would improve its financial performance.
Orica fell $3.29, or 15.3 per cent, to $18.19. The explosives and chemical supplier Orica reduced its full-year profit guidance by 10 per cent, blaming global economic conditions and higher than expected costs for its tunnelling business.
Rio Tinto rose $1.49, or 2.7 per cent, to $56.23. The miner boosted iron ore production by 6 per cent to a record 127.2 million tonnes during the first half of the year.
Santos fell 20¢, or 1.4 per cent, to $13.74, as the oil and gas producer cut its production forecasts due to problems caused by supply, weather and infrastructure.
Woolworths fell 69¢, or 2 per cent, to $33.30, after it said its bid to take on Bunnings continued to struggle, with its Masters hardware venture posting a bigger than expected loss.
Woodside Petroleum gained 25¢, to $37.73, even though the energy group suffered a slide in revenue in the second quarter of the year thanks to a drop in oil prices and lower production numbers.
Frequently Asked Questions about this Article…
The local market was mixed: the S&P/ASX200 finished slightly in the red for the week, slipping 1.8 points to 4,972.1, while the broader All Ordinaries ended slightly in the black, rising 1.9 points to 4,959.4. For everyday investors this shows a relatively flat week overall, with short-term moves driven more by regional sentiment than by a clear domestic trend.
The sell-off was driven by negative sentiment across Asian markets on Friday, which weighed on local resource stocks and erased much of the week's gains. Contributing factors included falls in other regional markets (Japan faced large declines amid talk of a sales tax rise and an upper house election) and investor concern about spillover effects if the US Federal Reserve reduces stimulus.
Global events had a mixed influence. US markets rallied (the S&P 500 hit a record high) and European equities rose after measures such as the ECB relaxing some collateral rules, and Bernanke’s testimony didn’t upset markets. That lifted local trade early in the session, but weakness elsewhere in Asia later in the day offset those gains.
Billabong shares rose strongly — up 17¢ or 74% to 40¢ for the week — after investors welcomed a refinancing deal that the article says will keep the troubled retailer solvent. For investors, refinancing can reduce near‑term survival risk, but it's important to follow further updates on execution and long‑term strategy.
BHP Billiton rose 55¢ (about 1.7%) to $33.86 after reporting record production and announcing billions of dollars in spending cuts — news that could support future cash returns to shareholders. Rio Tinto gained $1.49 (2.7%) to $56.23 after boosting iron ore production by 6% to a record 127.2 million tonnes in the first half, a strong operational result that helped lift its share price.
Orica fell $3.29 (15.3%) to $18.19 after the explosives and chemical supplier reduced its full‑year profit guidance by 10%. Management blamed weaker global economic conditions and higher‑than‑expected costs in its tunnelling business for the downgrade — a clear profit‑warning style event that hit investor confidence.
Santos fell 20¢ (1.4%) to $13.74 after cutting production forecasts due to supply, weather and infrastructure problems. Woolworths slid 69¢ (2%) to $33.30 after confirming its Masters hardware venture continued to struggle and posted a bigger‑than‑expected loss. Woodside Petroleum gained 25¢ to $37.73 despite reporting a second‑quarter revenue slide tied to lower oil prices and reduced production. Investors should monitor operational updates, production guidance and any further impact from commodity prices.
The article highlights the G20 meeting in Moscow (with a joint communique due Saturday) as an immediate event to watch, since officials will discuss spillover effects of any US Federal Reserve reduction in stimulus. Regional developments — such as political or tax news in Japan and shifts in US Treasury yields — could also spill over into Australian markets.
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