Stocks fall in pessimistic wait for US data

AUSTRALIA'S sharemarket dropped into the red yesterday after losing its pulse for much of the week as investors worried about the US economy.

By InvestSMART · 3 Sep 2011

By InvestSMART ·
3 Sep 2011

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AUSTRALIA'S sharemarket dropped into the red yesterday after losing its pulse for much of the week as investors worried about the US economy.

Buyers were holding back in the run-up to the release last night of US non-farm payroll figures.

The benchmark S&P/ASX 200 Index fell 64.6 points, or 1.5 per cent, to 4242.9.

HSBC's head of sales in global markets, Ian Collins, said that "more than anything" the payroll figures would indicate whether the world's biggest economy was slipping into another recession.

He said markets were pricing in a weak number. On Wall Street

yesterday the main indices fell about 1 per cent. The slide spread to Asia, with Hong Kong's Hang Seng the worst performer, falling 350.53 points, or 1.7 per cent, to 20,234.80.

Gold, a barometer of risk

aversion, climbed $US20.42 to $US1837.10 an ounce, while the

dollar, regarded as a risk asset,

dipped US0.06? to $US1.0694.

"At the moment, not only in

Australian equity markets, but

generally, you've got a situation where if you are in the commodity space you will be OK but everywhere else it's probably a pretty depressed outlook," Mr Collins said.

All sectors on the ASX finished in negative territory, with utilities and consumer discretionary losing the most, falling 2.4 per cent and 2 per cent respectively. For the week, the benchmark index was up 42.9 points, or 1 per cent, after moving in a range of 145.8 points.

Fairfax Media, owner of The Age, defied the slump, firming 1?, or 1.2 per cent, to 88?. It was a bounce back from last week's low of 69?.

Other media stocks were not so lucky. News Limited, the titles of which include The Australian and Herald Sun, lost 37?, or 2.3 per cent, to $15.91, while Seven West Media fell 10?, or 2.7 per cent, to $3.55.

Among the miners, BHP Billiton was 83? lower at $39.04 and Rio Tinto was down $1.03 at $72.05.

The big banks also closed down, with ANZ the weakest performer, losing 35?, or 1.7 per cent, to $19.92.

The worst performer was Tabcorp, which dropped 13?, or 4.6 per cent, to $2.70.

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Frequently Asked Questions about this Article…

Why did the S&P/ASX 200 fall yesterday and what was the market reaction?

The S&P/ASX 200 slipped 64.6 points (about 1.5%) to 4,242.9 as investors held back ahead of US non‑farm payrolls. Weakness on Wall Street (main indices down ~1%) and concern about the US economy pushed risk appetite lower, sending all ASX sectors into negative territory.

How did US non‑farm payrolls expectations affect Australian shares?

Market participants were cautious before the US payrolls release because the data would signal whether the US economy was weakening. HSBC’s Ian Collins said markets were pricing in a weak payroll number, which contributed to selling pressure on Australian equities.

Which ASX sectors were hit hardest and what does that mean for investors?

Utilities and consumer discretionary led losses, falling about 2.4% and 2% respectively. The article notes a broadly depressed outlook outside the commodity space, so everyday investors should be aware that cyclical and consumer‑linked sectors may be more vulnerable in risk‑off periods.

What happened to major mining stocks like BHP and Rio Tinto?

Miners were weaker: BHP Billiton finished lower at about $39.04, while Rio Tinto was down $1.03 to $72.05. The mining sector moved with the broader market weakness, though commodities were mentioned as relatively better positioned than other areas.

How did the big banks perform during the sell‑off?

Big banks closed lower, with ANZ the weakest among them, falling around 1.7% to $19.92. Banking stocks broadly contributed to the market decline as investors took a cautious stance.

Which media stocks stood out and which ones fell?

Fairfax Media bucked the trend and firmed roughly 1.2%, bouncing back from last week’s low, while other media names fell: News Limited lost about 2.3% to $15.91 and Seven West Media fell around 2.7% to $3.55.

Which stock was the worst performer and by how much did it fall?

Tabcorp was the worst performer mentioned, dropping about 4.6% to $2.70 as investors shunned riskier names during the sell‑off.

How did safe‑haven assets like gold and the US dollar react to the market drop?

Gold, often a barometer of risk aversion, climbed about US$20.42 to US$1,837.10 an ounce. The US dollar dipped slightly (around US$0.06) to about US$1.0694, reflecting mixed flows as investors adjusted positions ahead of the payrolls data.