Stocks grow dizzy near the fiscal cliff
THE sharemarket closed nearly 1 per cent lower after steep falls on Wall Street.
THE sharemarket closed nearly 1 per cent lower after steep falls on Wall Street.The benchmark S&P/ASX 200 Index was down 39.2 points, or 0.89 per cent, at 4349.2, while the broader All Ordinaries Index was down 40.1 points, or 0.91 per cent, at 4370.6.The Dow Jones Industrial Average dropped 185.23 points (1.45 per cent) to 12,570.95 overnight on Wednesday, its lowest close since June 26.RBS Morgans analyst Bill Chatterton said the heavy falls in the US had dragged the market lower."That's where the impact's coming from," Mr Chatterton said. "There's talk of fiscal cliffs and the European situation is taking a lot longer [to resolve] than the optimists were hoping. The GFC [global financial crisis] hangover doesn't just fix itself up in four or five years."Investors would need to brace for several more years of volatility, he said.Comments by US President Barack Obama about raising taxes on the wealthy, along with weak retail and manufacturing data in the US and in Europe, have been cited as triggers for "risk-off" falls.The "fiscal cliff" refers to the huge tax rises and spending cuts that automatically come into force in the US on January 1 and could send the world's largest economy back into recession if Republicans and Democrats cannot reach a compromise.BHP Billiton fell 61? to $33.12, Rio Tinto dropped $1.03 to $56.82 and Fortescue dropped 4? to $3.96.The four big banks suffered losses. ANZ shed 15? to $24.05, Westpac lost 21? to $24.64 and Commonwealth Bank was 40? lower at $58.69. National Australia Bank was also down, though only by 1? to $23.23.Qantas gained 5?, or 4.1 per cent, to $1.28 after it announced it would spend $100 million to buy back about 4 per cent of its issued stock and would repay $650 million of debt before its due date.Seven Group shares closed 17? lower at $6.30.Meanwhile, the dollar followed the sharemarket lower to finish the day down almost US1?.Late on Thursday, the currency was trading at US103.58?, down from US104.52? on Wednesday.OzForex head of corporate dealing Jim Vrondas said the currency moved lower amid weaker US sentiment and continued to fall on Thursday.Global sentiment has turned sharply negative over the past fortnight, partly due to concerns about the fiscal cliff in the US.Mr Vrondas said the key event for the currency would be the release of European gross domestic product data for the September quarter. He said the currency was likely to move a little lower.