THE sharemarket closed firmly in the red yesterday after a fall in commodity prices and as it became apparent a full resolution of the European debt crisis is not imminent.
The benchmark
S&P/ASX 200 Index was down 68.8 points, or 1.63 per cent, to 4144.9.
CMC Markets chief market strategist Michael McCarthy said investor sentiment was fragile and risk-averse.
"Any bad news is magnified and positive news tends to be ignored," he said. "We're all concerned about the curse on our global village, and we want to burn a witch." But a market pull-back was healthy, given recent rallies on the Australian market.
"We don't want to see markets go in a straight line because that's just setting itself up for a reversal," Mr McCarthy said.
The view on Europe's debt crisis was tending back towards pessimism.
It was becoming clear that the situation would not be resolved this weekend, when European leaders hold a summit.
"Realistically, that's not going to happen, and at best what we're going to see is some containment of the potential dangers to the financial system," Mr McCarthy said. "They'll deal with the debt market situation but won't be able, in a short time frame, to deal in an effective manner with the longer-term structural problems, that is, the budget deficits so many of those southern European nations are running."
Mr McCarthy said investors would stay on the sidelines until the G20 meeting on November 3.
He said the mining and energy sectors were the worst performers yesterday, after a fall in commodity prices, particularly for oil and copper.
Among the major miners, Rio Tinto was down $2.23, or 3.4 per cent, at $62.85, BHP Billiton slipped 92?, or 2.5 per cent, to $35.48 and Fortescue backtracked 21?, or 4.7 per cent, to $4.31.
In energy stocks, Woodside was down $1.46, or 4.2 per cent, at $33.60, while Santos eased 27?, or 2.2 per cent, to $12.07 after the company increased third-quarter sales revenue by 27 per cent and maintained its full-year production guidance.
Newcrest reported a 16 per cent drop in gold production for the September quarter.
The spot price of gold in Sydney was $US1614.79 an ounce, down $US45.08 from Wednesday's $US1659.87.
National turnover was below average, Mr McCarthy said, at about 1.55 billion shares, worth $4.7 billion.
More than twice as many stocks fell for every one that rose.
Frequently Asked Questions about this Article…
Why did the S&P/ASX 200 fall yesterday and how big was the drop?
The S&P/ASX 200 closed down 68.8 points, or 1.63 percent, to 4,144.9. The fall was driven by weaker commodity prices and growing doubts that the European debt crisis would be resolved quickly, which left investors feeling fragile and risk‑averse.
Which sectors were the worst performers on the ASX and why did mining and energy stocks fall?
The mining and energy sectors were the worst performers after commodity prices, especially oil and copper, fell. Lower commodity prices typically pressure miner and oil‑and‑gas company earnings and investor sentiment, which translated into share price declines across those sectors.
How did major mining stocks like Rio Tinto, BHP and Fortescue perform during the sell‑off?
According to the report, Rio Tinto fell $2.23 (about 3.4%) to $62.85, BHP Billiton slipped about 2.5% to $35.48, and Fortescue backtracked about 4.7% to $4.31 as mining stocks were hit by the commodity price downturn.
What happened to energy stocks such as Woodside and Santos, and why did Santos fall despite higher sales revenue?
Woodside fell $1.46 (around 4.2%) to $33.60. Santos eased about 2.2% to $12.07 even though it reported a 27% increase in third‑quarter sales revenue and maintained full‑year production guidance. The wider weakness in commodity markets and risk‑off sentiment weighed on energy stock prices despite company‑level sales news.
What did Newcrest report about gold production and what was the gold price movement?
Newcrest reported a 16% drop in gold production for the September quarter. The spot price of gold in Sydney was US$1,614.79 an ounce, down US$45.08 from the previous day’s US$1,659.87, reflecting broader market moves in precious metals.
Did analysts view the market pull‑back as a problem or a healthy correction?
CMC Markets chief market strategist Michael McCarthy said the pull‑back was healthy after recent rallies. He warned investors were fragile and risk‑averse—meaning bad news gets magnified—but noted that a correction helps avoid markets moving in an unsustainably straight line.
Are investors expected to stay cautious until global policy meetings like the G20?
Yes. The article quotes Michael McCarthy saying investors were likely to stay on the sidelines until the G20 meeting on November 3, as traders look for clearer global policy signals before re‑committing to riskier positions.
What was trading activity like during the sell‑off — turnover and market breadth?
National turnover was below average at about 1.55 billion shares worth approximately $4.7 billion. Market breadth was weak: more than twice as many stocks fell as rose on the day.
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