DESPITE a bearish prediction on global gold prices and a serious fall in consumer confidence, the sharemarket finished only slightly lower yesterday.
The S&P/ASX 200 slid
25 points in morning trading but by the close had whittled that back to a loss of
2.9 points, to 4190.5.
A warning from Reserve Bank deputy governor Ric Battellino that the economy would suffer some spill-over effects from Europe's debt crisis would not have added to investor confidence.
It came on top of news that the Melbourne Institute-Westpac Consumer Confidence survey had found a 20 per cent slide in confidence this month.
"The boost to the consumer mood from the November rate cut was relatively temporary," said ANZ senior economist Katie Dean.
"Households are becoming more concerned about the troubles in Europe and what this means for employment prospects. You can't ignore this result, but it's not necessarily a sign that the economy is about to weaken significantly, given business confidence is holding up quite well."
A swag of goldminers lost ground after Dennis Gartman, a US-based economist who foresaw the 2008 commodities slump, warned that the metal could fall to as low as $US1475 an ounce more than $US400 below its record high of $US1921.15 reached on September 6.
"The weak Indian rupee could make it more expensive for the world's biggest consumer of gold to buy the precious metal," Mr Gartman said.
"Since the early autumn here in the northern hemisphere gold has failed to make a new high. Each high has been progressively lower than the previous high, and now we've confirmation that the new interim low is lower than the previous low.
"We have the beginnings of a real bear market, and the death of a bull."
Gold dropped sharply in late US trading yesterday morning. It picked up slightly in Australia but at the close the spot price was down $US12.80 an ounce at $US1639.83. That took its fall this week to $US70.42 an ounce.
Newcrest Mining lost 37? (1.2 per cent) to $31.84, Kingsgate dropped 31?
(4.7 per cent) to $6.29, and OZ Minerals dipped 4?
(0.4 per cent) to $10.68. But Medusa Mining rose 6?, or 1.2 per cent, to $4.93.
Other miners and bank stocks were mixed. Rio Tinto was up 40? at $63.16 but BHP Billiton lost 12? to $35.70. ANZ closed 23? higher at $20.97 while Westpac lost 3? to $20.80.
The dollar finished at $US1.0016 from $US1.0083 on Tuesday.
Frequently Asked Questions about this Article…
What happened to the S&P/ASX 200 index in the article's market update?
The S&P/ASX 200 slid about 25 points in morning trading but recovered most losses to finish only slightly lower — down 2.9 points at 4,190.5 by the close.
How did consumer confidence and Reserve Bank comments affect investor sentiment?
The Melbourne Institute–Westpac consumer confidence survey showed a sharp 20% fall this month, and Reserve Bank deputy governor Ric Battellino warned the economy could suffer spill‑over effects from Europe’s debt crisis. The article quotes ANZ economist Katie Dean saying the lift from November's rate cut was temporary and households are more worried about Europe, though business confidence was still holding up.
What was said about gold prices and how did the market react?
US economist Dennis Gartman warned that gold could fall as low as US$1,475 an ounce, calling it the 'beginnings of a real bear market.' Following bearish commentary, the spot price was down US$12.80 to US$1,639.83 at the close, leaving gold US$70.42 lower for the week.
Which gold miners moved the most and how did their shares perform?
Several goldminers lost ground: Newcrest Mining fell 1.2% to $31.84, Kingsgate dropped 4.7% to $6.29 and OZ Minerals dipped 0.4% to $10.68. By contrast, Medusa Mining rose 1.2% to $4.93, according to the article.
How did major miners and banks fare on the day covered by the article?
The major resources and banking names were mixed: Rio Tinto rose to $63.16 while BHP Billiton fell to $35.70. In the banks, ANZ closed higher at $20.97 and Westpac finished lower at $20.80.
What did the article say about currency moves and the Australian dollar?
The Australian dollar finished at US$1.0016, down from US$1.0083 on the prior trading day.
Why did Dennis Gartman mention the Indian rupee when talking about gold?
Gartman warned that a weak Indian rupee could make gold more expensive for India, the world’s biggest consumer of gold, which could reduce demand and put further pressure on prices.
Does the article suggest investors should expect a major economic downturn?
The article reports a sharp fall in consumer confidence and warnings about European spill‑over risks, but it also notes business confidence was holding up. ANZ economist Katie Dean is quoted saying the consumer mood dip is concerning but not necessarily a sign the economy is about to weaken significantly. This is a market snapshot rather than a definitive forecast.
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