Stocks follow overseas lead down

THE sharemarket has lost ground for the third session in a row following last week's heavy losses on European and US exchanges, and further signs that China's economy is slowing.

By InvestSMART · 10 Jul 2012

By InvestSMART ·
10 Jul 2012

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THE sharemarket has lost ground for the third session in a row following last weeks heavy losses on European and US exchanges, and further signs that Chinas economy is slowing.

Data showing Chinese inflation in June was softer than expected, at just 2.2 per cent, prompted a selloff of riskier assets.

The metals and mining sector dropped 2.8 per cent while materials stocks lost 2.6 per cent and energy stocks lost 2.1 per cent.

The financial sector fared only slightly better, down just 0.5 per cent, as the big banks slipped.

Defensive stocks bucked the trend, with Telstra hitting its highest level in 3#13Frac years, gaining 4? to $3.78.

The S&P/ASX 200 Index fell 39.5 points, or 0.95 per cent, to 4118.3 while the dollar slipped to US101.91? from Fridays close of US102.55?.

Analysts said last weeks disappointing US jobs report was the main anchor on the Australian market yesterday. But the China inflation data and last weeks stimulus measures by China, the US and UK were also a concern.

Markets seem to be stuck in a bit of quicksand at the moment, theyre not moving, said UBSs George Kanaan. We had the rate cut out of China last week and from the European Central Bank, but markets did nothing. That was a bit of a shock.

Iluka Resources was the standout performer yesterday, but for the wrong reasons. The mineral sands miner lost 24.1 per cent in value, dropping $2.82 to $8.88 after surprising the market with a sales downgrade, and dire warnings about the global short-term outlook.

After Lend Lease secured $2 billion in funding for its Barangaroo development in Sydney Harbour, fund managers said the market had expected its share price to do better. Lend Lease dipped 1?, closing at $7.46.

Global miner BHP Billiton dropped 61? to $31.48 and Rio Tinto lost $1.26 to $56.54.

The big banks all eased, NAB dipping 11? to $23.67, ANZ 8? to $22.50, Commonwealth 31? to $53.78 and Westpac 14? to $21.60.

Leighton gained 3? to $16.51 after it sold its Thiess Waste Management for $218 million.

Listed investment fund Mirrabooka climbed 8? to $1.89 after its full-year profit rose by 18 per cent.

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Frequently Asked Questions about this Article…

Why did the ASX fall today and what drove the market decline?

The S&P/ASX 200 fell 39.5 points (about 0.95%) as investors reacted to softer global data and risk-off sentiment. Key drivers cited in the article were a disappointing US jobs report, softer-than-expected Chinese inflation for June (2.2%), and concerns around recent stimulus measures from China, the US and the UK. Analysts said those factors weighed on riskier assets and kept markets subdued.

Which sectors were hit hardest on the Australian sharemarket?

Metals and mining showed the biggest fall, with the sector down about 2.8%, while materials lost around 2.6% and energy slipped roughly 2.1%. Financials were weaker too but fell by a smaller amount (around 0.5%), reflecting broad weakness across cyclicals.

How did major miners like BHP Billiton and Rio Tinto perform?

Global miners were weaker: BHP Billiton fell to $31.48 and Rio Tinto closed at $56.54, reflecting the broader sell-off in the metals and mining sector after the negative market tone.

What happened to Iluka Resources and why did its shares plunge?

Iluka Resources plunged after surprising the market with a sales downgrade and issuing dire warnings about the global short-term outlook. The mineral sands miner lost $2.82 in value and closed at $8.88, making it a notable underperformer for the day.

How did the big banks perform and what were their closing share prices?

The major banks eased on the day. According to the article, NAB closed at $23.67, ANZ at $22.50, Commonwealth Bank at $53.78 and Westpac at $21.60, reflecting modest declines amid the broader market pullback.

Which stocks bucked the market downtrend and why?

Defensive and selective stocks outperformed. Telstra rose to $3.78, hitting its highest level in years, and defensive appeal helped it buck the trend. Leighton gained to $16.51 after selling Thiess Waste Management for $218 million, and listed investment fund Mirrabooka climbed to $1.89 after reporting an 18% rise in full-year profit.

What corporate news affected share prices today, such as Lend Lease or Leighton?

Lend Lease secured $2 billion in funding for its Barangaroo development, but the market had expected a stronger share reaction and the stock dipped to $7.46. Leighton rose to $16.51 after selling Thiess Waste Management for $218 million, which was viewed positively by investors.

What economic data and events should everyday investors be watching after this market move?

Based on the article, investors should watch upcoming US jobs data and other major economic releases, Chinese inflation and economic signals, and any new stimulus or policy moves from China, the US and the UK. Market commentators also noted recent central bank rate moves (including rate cuts) that failed to spark a rally, so follow policy announcements and how markets react to them.