Stocks ease in wait for Greek debt outcome

THE sharemarket closed weaker yesterday as investors awaited an outcome to Greek debt-restructure plans, with euro-zone finance ministers scheduled to meet last night.

By InvestSMART · 24 Jan 2012

By InvestSMART ·
24 Jan 2012

Comments

THE sharemarket closed weaker yesterday as investors awaited an outcome to Greek debt-restructure plans, with euro-zone finance ministers scheduled to meet last night.

The S&P/ASX 200 Index was down 14.5 points, or

0.34 per cent, at 4225.1.

IG Markets market strategist Stan Shamu said private owners of Greek debt were believed to have made their maximum offer for the losses they were willing to accept under a bond swap.

"This has raised concerns that any further demands may kill off a voluntary agreement," Mr Shamu said.

Those engaged in the talks had hoped to have the details wrapped up by Friday. "A lack of an agreement by now is further unsettling investors and risk assets could come undone should more delays materialise," Mr Shamu said.

Australia's producer price index rose 0.3 per cent in the December quarter, below expectations of a 0.4 per cent rise. Mr Shamu said the weaker than expected rise added to anticipation that third-quarter consumer price index figures due for release tomorrow would show inflation was subdued enough to keep the door open for a further interest rate cut next month.

Consumer discretionary stocks benefited from the data, he said. "For some of these retailers, the probability of a rate cut is one of the things driving them higher today."

Harvey Norman and

JB Hi-Fi edged up 2? to $2.05 and $12 respectively.

Rio Tinto put on 36? to $67.89 but BHP Billiton fell 24? to $37.24 and Fortescue Metals backtracked 19?, or 3.7 per cent, to $5.

The big four banks all lost ground, Westpac falling 22? at $20.46, NAB 3? to $23.85, Commonwealth 9? to $49.74 and ANZ 2? to $20.87.

Origin Energy dipped 1? to $13.55 after China's state-owned Sinopec signed up for more gas and a higher equity interest in the Origin and ConocoPhillips-led Australia-Pacific liquefied natural gas project.

Ansell eased 1? to $14.96 after the gloves and condoms supplier appointed Koreca Industries to distribute its personal protective equipment products in the Republic of Korea.

The spot price of gold finished the Australian session at $US1671.95 an ounce, up $US16.50 from Friday's closing price of $US1655.45. Goldminer Newcrest, due to release its second-quarter production report today, fell 24? to $32.20.

Most markets in the Asian region were closed yesterday for the Chinese New Year.

National turnover was 1.26 billion shares worth $2.80 billion, with 457 stocks up, 505 down and 354 steady.

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

Share this article and show your support

Frequently Asked Questions about this Article…

Why did the ASX 200 close weaker on the day covered in the article?

The S&P/ASX 200 closed lower as investors waited for the outcome of Greek debt-restructure talks, with euro-zone finance ministers due to meet. The market was also reacting to mixed domestic data — Australia’s producer price index came in softer than expected — which together increased risk aversion and pushed the index down 14.5 points (about 0.34%) to 4,225.1.

How could the Greek debt-restructure talks affect Australian shares and risk assets?

According to market commentary in the article, private holders of Greek debt had likely made their maximum offer for losses under a bond swap, raising concerns that further demands could scuttle a voluntary agreement. That uncertainty is unsettling investors globally and could put pressure on risk assets, including Australian shares, if talks are delayed or fail.

What did the December-quarter producer price index (PPI) mean for inflation expectations and interest rates?

The article reports Australia’s PPI rose 0.3% in the December quarter, below the 0.4% expected. Market commentators said the softer-than-expected PPI increased the chance that upcoming consumer price index (CPI) data would show subdued inflation — keeping the door open for a possible interest rate cut next month.

Which sectors and stocks benefited from the weaker inflation data?

Consumer discretionary stocks were among the beneficiaries, as investors priced in a higher probability of an interest-rate cut. The article notes retailers like Harvey Norman and JB Hi‑Fi edged higher (to about $2.05 and $12 respectively) on that view.

How did major miners and gold-related stocks trade on the day?

Miner movements were mixed: Rio Tinto rose to about $67.89 while BHP Billiton fell to about $37.24 and Fortescue slipped to around $5. Gold’s spot price rose — finishing the Australian session at US$1,671.95 an ounce, up US$16.50 — and goldminer Newcrest eased to about $32.20 ahead of its second-quarter production report.

What happened to Australia’s big four banks during the session?

The big four banks all lost ground in the session. The reported prices in the article were Westpac at about $20.46, NAB around $23.85, Commonwealth Bank about $49.74 and ANZ near $20.87, reflecting broad weakness in the financial sector that day.

Why did Origin Energy’s share price dip, and what role did Sinopec play?

Origin Energy dipped to about $13.55 after the article reported China’s state-owned Sinopec signed up for more gas and a higher equity interest in the Origin/ConocoPhillips‑led Australia‑Pacific LNG project. The change in project equity and supply arrangements was cited as the reason for Origin’s modest share weakness.

Were there any notable corporate updates that affected stock moves?

Yes. Ansell eased to about $14.96 after appointing Koreca Industries to distribute its personal protective equipment products in South Korea. Also, Newcrest — a goldminer due to release its second-quarter production report — eased in the session, while national market turnover was reported at 1.26 billion shares worth approximately $2.80 billion.