Steady as she goes despite the stormy seas in Europe
For the week, the benchmark S&P/ASX200 index fell 0.8 points, at 4966.5 points, while the broader All Ordinaries index fell 0.9 points, at 4979.9 points.
Attention was focused on Cyprus for the second full week in a row, with increased scrutiny of its troubled banking system.
The trading week began with investors waiting to see if European authorities had come up with a crucial last-minute deal to secure some sort of bailout agreement for the island nation.
The week before, Cyprus had fallen into serious trouble when an original bailout deal - hammered out by authorities such as the International Monetary Fund - had imposed a levy on Cypriot bank deposits to force the country to contribute to a multi-billion euro rescue package. Global markets were seriously unsettled when that deal was rejected.
This week, world markets rallied briefly after Europe's leaders struck a late deal to prevent a meltdown in the Cypriot banking system.
But then they were struck again, this time by reports that the bailout deal could be used as a blueprint for other stricken European nations.
But despite all this, currency traders said foreign exchange markets had already moved on.
"Cypriot residents will feel the fiscal pain for a long time but foreign exchange markets are already looking elsewhere in Europe, where Italy's political farce is back on the front pages," said Robert Rennie, Westpac's chief currency strategist.
"It's Italy we are more worried about. The political story in Italy does not look good. After anti-establishment party Five Star rejected its offer of an alliance, Democratic Party leader Bersani was quoted as saying, 'Only an insane person would want to govern this country, which is in a mess.'
"He has a point."
Interestingly, Australian shares have fallen 2.7 per cent in March, following 3 consecutive months of gains from December to February. In that time the market rose a cumulative 13 per cent.
For the week, Woodside Petroleum lost $1.12, at $35.82. Australia's energy players are looking at offshore gas processing to ensure resources such as the Browse and Scarborough fields are exploited in the near future.
Kathmandu Holdings rose 10¢, at $2.05, after it defied difficult retail conditions to post a hefty rise in first half profit as new stores performed well and online sales grew.
Leighton Holdings rose 34¢, at $20.54, after the troubled company elevated Bob Humphris to chairman. It is seeking to quickly put the sudden resignations of three directors behind it.
Nufarm lost 79¢, at $3.95. Shares in the company have plunged after the agricultural chemicals supplier's profit fell 53 per cent.
Qantas rose 8.5¢, at $1.78. The airline is free to pursue its plan to revive its struggling international arm after the competition watchdog gave the green light to a partnership with Emirates.
Sundance Resources was placed in a trading halt and last traded at 21¢. Hanlong's takeover of Sundance Resources looks to be almost dead.
Westfield Group rose 9¢, at $10.85. The shopping centre developer will sell a 49.9 per cent stake in six shopping malls in Florida to O'Connor Capital Partners for $US700 million.
Frequently Asked Questions about this Article…
The market was essentially flat — the S&P/ASX200 finished the week down only 0.8 points at 4,966.5 and the All Ordinaries fell 0.9 points to 4,979.9. For everyday investors this suggests short-term volatility was limited over the week, though monthly moves (Australian shares were down 2.7% in March after earlier gains) underline that markets can swing over longer horizons.
The Cyprus banking issues drew heavy attention and briefly unsettled global markets when a deposit levy was rejected, then calmed after a late European deal aimed at preventing a banking meltdown. Currency traders appeared to move on quickly, but the episode highlighted how European sovereign or banking stress can create short-term market volatility — something Australian investors should monitor but not necessarily panic over.
Woodside Petroleum fell $1.12 to $35.82 for the week. Australian energy players are focused on offshore gas processing plans to accelerate development of resources such as the Browse and Scarborough fields, which is a key sector theme investors should watch for future earnings and project risk.
Kathmandu Holdings rose 10¢ to $2.05 after reporting a strong first-half profit driven by new store performance and growth in online sales. For retail investors, this suggests that well-executed store expansion plus e-commerce growth can help retail companies outperform even in tough conditions.
Leighton Holdings jumped 34¢ to $20.54 after promoting Bob Humphris to chairman as the company seeks to move past the sudden resignations of three directors. Leadership changes like this can restore investor confidence if they signal stability and a clear plan to address governance or strategic issues.
Nufarm lost 79¢ to $3.95 after reporting a 53% decline in profit. This highlights earnings risk in agricultural chemicals — factors like crop conditions, input costs and demand cycles can cause large swings in profitability and share price.
Qantas rose 8.5¢ to $1.78 after the competition watchdog approved a partnership with Emirates. That green light allows Qantas to pursue plans to revive its struggling international arm, which could improve long-term competitive positioning if the partnership delivers on route and revenue synergies.
Sundance Resources was placed in a trading halt and last traded at 21¢ amid reports that Hanlong's takeover looks almost dead, creating uncertainty for shareholders. Westfield Group rose 9¢ to $10.85 after announcing it will sell a 49.9% stake in six Florida malls to O'Connor Capital Partners for US$700 million — a large asset sale that can materially affect property developer balance sheets and distributions.
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