US, Qantas gloom help drag market to seven-week low
The benchmark S&P/ASX 200 Index dropped 75.8 points (1.4 per cent) to 5198, its lowest level since mid-October. It was the biggest one-day selloff since August 7. The broader All Ordinaries Index lost 70.6 points (1.4 per cent) to 5196.9.
The market got off to a slow start after Wall Street chalked up its fourth straight day of losses over improving jobs data that lifted expectations the US central bank might start to wind back its $US85 billion-a-month stimulus when it meets in mid-December. A profit warning by Qantas contributed to the early gloom.
Westpac lost 2.7 per cent to $31.49, Commonwealth Bank 1.7 per cent to $75.50, NAB 2.1 per cent to $33.66 and ANZ 1.8 per cent to $31.19.
Qantas was the worst-performing stock in the top 200, slumping 11.2 per cent to a year low of $1.07 after warning it expected a half-year loss of $300 million and would slash at least 1000 jobs over the next year.
The big miners fell despite the combination of a falling dollar and firmer commodity prices as the spot price of iron ore, landed in China, strengthened 1.1 per cent to $US139.70 a tonne.
BHP Billiton was down 2¢ to $36.78 and Rio Tinto 0.4 per cent to $66. But the third largest producer Fortescue Metals Group was up 1.1 per cent to $5.69.
Information technology was the only sector to finish higher, up 0.1 per cent as share registry Computershare, which gets a significant translation benefit from a lower dollar, rose 0.2 per cent to $10.76.
Credit reporting agency Veda Group made a stellar debut on the exchange, lifting 40 per cent to $1.75, before the biggest float of the year on Friday from Nine Entertainment Co.
Wilson HTM Investment Group senior investment manager Peter McManus said market falls this week were largely attributable to "long-term interest rates rising and putting pressure on high-yielding equity markets like Australia".
But he also said that institutional investors were "likely to be selling existing profitable holdings in order to participate in new listings".
Australia's trade deficit widened to $529 million in October and the dollars was buying $US90.43.
Frequently Asked Questions about this Article…
The S&P/ASX 200 Index dropped to a seven-week low due to concerns that the US Federal Reserve might reduce its stimulus program soon. This uncertainty, combined with a profit warning from Qantas, contributed to the market's decline.
Qantas issued a profit warning, expecting a half-year loss of $300 million and announcing plans to cut at least 1,000 jobs. This news led to Qantas' stock slumping 11.2%, making it the worst-performing stock in the top 200 and contributing to the overall market gloom.
The potential reduction of the US Federal Reserve's $85 billion-a-month stimulus raised concerns among investors, leading to a selloff in the market. This fear of reduced stimulus contributed significantly to the market's decline.
Major banks experienced declines during the market downturn. Westpac fell 2.7%, Commonwealth Bank dropped 1.7%, NAB decreased by 2.1%, and ANZ was down 1.8%.
Yes, the information technology sector was the only one to finish higher, with a 0.1% increase. Computershare, benefiting from a lower dollar, rose 0.2%.
Despite a falling dollar and firmer commodity prices, major miners like BHP Billiton and Rio Tinto saw declines. However, Fortescue Metals Group bucked the trend, rising 1.1%.
Veda Group made a strong debut on the stock exchange, with its shares lifting 40% to $1.75, ahead of the year's biggest float from Nine Entertainment Co.
Experts like Peter McManus from Wilson HTM Investment Group attributed the market falls to rising long-term interest rates, which put pressure on high-yielding equity markets like Australia. Additionally, institutional investors were likely selling profitable holdings to participate in new listings.
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