THE sharemarket closed lower yesterday, pulled down by Friday's rating downgrades for three of the big banks, lingering political uncertainty and BHP Billiton going ex-dividend.
The S&P/ASX 200 Index was down 39.4 points, or 0.92 per cent, at 4267.4.
CMC Markets chief market strategist Michael McCarthy said it was hard to ascertain whether any one factor was responsible for yesterday's reversal. The market had been trading in the upper end of its recent range, so some investors might have decided to take profits.
"A lot of people are talking about the leadership struggle, but I would have thought that for the moment it's dealt with," he said. "I can only think that some people are concerned that it might re-emerge very quickly."
Mr McCarthy said Asian markets had performed fairly strongly yesterday, so there was no negative lead there.
BHP Billiton paying its dividend was certainly a contributing factor, but BHP's share price fell by more than the size of the dividend.
Mr McCarthy said that although three of the banks had ratings downgrades on Friday, they had performed better than the broader market yesterday.
National Australia Bank dipped 3? to $23.49, ANZ retreated 12? to $22.08, Westpac slipped 7? to $20.71, and Commonwealth Bank eased 26? to $49.44. On Friday, the Fitch ratings agency said it had downgraded their ratings by one notch to AA- from AA due to their dependence on wholesale funding markets.
In the resource sector, BHP Billiton finished down 72? at $35.82, Rio Tinto shed 69? to $67.40 and goldminer Newcrest was $1.04 weaker at $33.51.
Shares in oil refiner Caltex Australia lost 8? to $12.90 after it reported an $852 million loss for calendar 2011.
Oil and gas producer Roc Oil edged up 1? to 40? after it booked its first annual profit since 2005.
Fellow oil and gas producer Beach Energy fell 9.5? to $1.67 despite returning to first-half profitability.
Among other stocks, KFC and Sizzler restaurants operator Collins Foods lost 5? to $1.18 after it said trading conditions remained difficult.
Woodchipper Gunns picked up 1? to 18.5? despite posting a larger first-half loss and saying trading conditions would remain tough as long as the dollar stayed strong.
Spot gold finished at $US1774.50 an ounce down $US2.53 from Friday's close and last night in Europe had slid to $US1767.88.
Frequently Asked Questions about this Article…
Why did the Australian sharemarket close lower yesterday?
The market fell due to a mix of factors mentioned in the article: Friday’s one‑notch ratings downgrades for three big banks, lingering political leadership uncertainty, and BHP Billiton going ex‑dividend. CMC Markets strategist Michael McCarthy also noted profit‑taking after the market had traded near the top of its recent range.
How much did the S&P/ASX 200 fall and what was the closing level?
The S&P/ASX 200 fell 39.4 points, or 0.92%, closing at 4,267.4 according to the article.
What did Fitch’s downgrade mean for the major Australian banks on the day?
Fitch downgraded the banks by one notch to AA‑ from AA, citing their dependence on wholesale funding markets. Despite that, the article says the banks actually performed better than the broader market that day. Prices reported included National Australia Bank at $23.49, ANZ at $22.08, Westpac at $20.71 and Commonwealth Bank at $49.44.
Why did BHP Billiton shares fall after paying its dividend?
BHP went ex‑dividend, and while dividend payments often affect prices, the article notes BHP’s share price fell by more than the size of the dividend. BHP finished the day down (about 7.2%) at $35.82.
How did major resource stocks like Rio Tinto and Newcrest perform?
Resource stocks were weak: Rio Tinto declined (about 6.9%) to $67.40, and gold miner Newcrest was $1.04 weaker, finishing at $33.51, according to the report.
What happened to oil and gas stocks such as Caltex, Roc Oil and Beach Energy?
Caltex Australia fell about 8% to $12.90 after reporting an $852 million loss for calendar 2011. Roc Oil edged up roughly 1% to about 40¢ after recording its first annual profit since 2005. Beach Energy fell about 9.5% to $1.67 despite returning to first‑half profitability.
Why did restaurant operator Collins Foods and timber company Gunns move the way they did?
Collins Foods fell about 5% to $1.18 after saying trading conditions remained difficult. Gunns picked up around 1% to 18.5¢ even though it posted a larger first‑half loss and warned that trading conditions would stay tough while the Australian dollar remained strong.
Did commodities such as gold influence the market, and what was the gold price?
The article notes spot gold finished at US$1,774.50 an ounce, down US$2.53 from Friday, and had slipped to US$1,767.88 in Europe. While not cited as the main market driver, commodity moves were reported alongside the day’s sharemarket weakness.
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