Stocks end a losing year with a whimper

BUYERS kept to the sidelines and the sharemarket closed lower on the last trading day of 2011, a year in which it fell more than 15 per cent.

By InvestSMART · 31 Dec 2011

By InvestSMART ·
31 Dec 2011

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BUYERS kept to the sidelines and the sharemarket closed lower on the last trading day of 2011, a year in which it fell more than 15 per cent.

After overnight gains of more than 1 per cent in Wall Street's main indices, stocks opened slightly higher but quickly turned negative and slid for most of the session.

The S&P/ASX 200 Index ended

a shortened trading day down

14.5 points at 4056.6.

It lost ground on every day this week.

Only two sectors finished ahead. Industrials edged up 0.04 per cent while consumer discretionaries put on a more substantial 0.6 per cent.

Materials the hardest hit for the week, down almost 3 per cent slipped 0.16 per cent. BHP Billiton ended down 8? at $34.42 while Rio Tinto was steady at $60.30.

The energy sector eased 0.55 per cent and healthcare fell 0.62 per cent.

The big four banks all ended in the red, ANZ losing 12? to $20.53, Commonwealth 11? to $49.22, National Australia Bank 16? to $23.36 and Westpac 15? to $20.

Burrell Stockbroking adviser Jamie Elgar said it was a soft finish to 2011.

"It is a little disappointing considering the lead that we had from Wall Street," he said. "We seem to be disconnected from what's going on on Wall Street, with everyone looking to what is happening in Europe."

Curiously, however, European stocks traded strongly on Thursday night. Italy's much-anticipated debt auction raised ?7 billion

($A9 billion), less than had been

targeted, but the interest rate paid came in below the danger threshold of 7 per cent.

Gold dropped to a low of $US1522.65 an ounce in US trading on Thursday night but staged a comeback to finish the Australian session at $US1555.12, up US92? from its local close on Thursday.

The move reflected a dip in the US dollar as the euro rose in response to the auction results. The Australian dollar put on almost three-quarters of a US cent, ending the local session at $US1.0162 from $US1.0090.

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Frequently Asked Questions about this Article…

Why did the ASX close lower on the last trading day of 2011?

Buyers stayed on the sidelines and local stocks slid for most of the session. The S&P/ASX 200 finished down 14.5 points at 4056.6 after losing ground every day that week, with investor attention focused on developments in Europe despite overnight gains on Wall Street.

Which sectors outperformed or underperformed on the final trading day of 2011?

Only two sectors finished ahead: Industrials edged up about 0.04% and consumer discretionary rose around 0.6%. Materials, the hardest-hit sector for the week (down nearly 3%), slipped 0.16% on the day. Energy eased about 0.55% and healthcare fell roughly 0.62%.

How did major miners BHP Billiton and Rio Tinto perform?

BHP Billiton ended the day lower at $34.42, while Rio Tinto was relatively steady at $60.30.

How did the big four Australian banks finish and what were their prices?

All four major banks closed in the red: ANZ finished at $20.53, Commonwealth Bank at $49.22, National Australia Bank at $23.36 and Westpac at $20.

What did market commentators say about the market’s year-end performance?

Burrell Stockbroking adviser Jamie Elgar described it as a soft finish to 2011, saying it was disappointing given Wall Street’s lead and that Australian markets appeared disconnected as investors focused on uncertainty in Europe.

Did European debt news affect markets and investor sentiment?

Yes. Italy’s debt auction raised €7 billion — less than targeted — but crucially the interest rate paid stayed below the 7% danger threshold. European stocks traded strongly on the news, which helped push the euro higher and the US dollar lower, influencing global markets.

What happened to gold prices and why did they move?

Gold dipped to a low of US$1,522.65 an ounce in US trading but recovered to finish the Australian session at US$1,555.12 an ounce. The rebound reflected a weaker US dollar after the euro strengthened on the Italian auction results.

How did the Australian dollar (AUD) perform on the last trading day of 2011?

The Australian dollar strengthened, gaining almost three-quarters of a US cent and ending the local session at US$1.0162, up from US$1.0090.