Shares slump in afternoon trade as Euro debt concerns linger
After jumping out of the blocks this morning on the back of a strong lead from global markets, the Australian stock exchange fell away in the afternoon to finish 1.1% lower. This morning the banks rallied, while the miner’s were flat ahead of tonight’s budget where the government will confirm the 40% super profits tax.
Late in the day trade shares fell away as the Euro currency gave up gains from Monday's strong rally. The selling of the Euro pointed to concerns that the $1 trillion Greek debt and Euro defence fund was just a very large band-aid to the European debt crisis, without addressing the underlying problems.
A further catalyst to the sell-off on the Australian domestic market was Chinese economic data showing inflation at 18-month highs, with investors nervous it will prompt the Chinese central government to reign in spending and economic growth.
At the end of the day, the All Ords dropped 49.0 to 4,573.2, while the ASX/200 lost 51.8 to 4,548.0. Around 2.2 billion shares worth around $5.9 billion had changed hands.
The Banks and Financials sector fell 1%.
CBA was the worst performer, down 1.6% to $54.85.
Meanwhile, NAB and ANZ were both 1.1% in the red, while Westpac weakened 0.8% to $24.82.
Investment bank Macquarie lost 70c, or 1.5% to $45.92.
IAG was the weakest of the insurers, down 5c to $3.70. The insurer came out this morning warning shareholders to ignore unsolicited share purchase offers.
Westfield, meanwhile, dipped 18c to $12.18 as the Property Trusts sector shed 0.6%.
BHP Billiton fell 87c to $38.13, while Rio Tinto lost $1.70 to $67.10 as investors booked profits following strong gains yesterday.
The broader Materials and Resources sector drop 2.2%.
In sector news, Xstrata placed all of its projects in Australia under review, as a result of the government’s proposed 40% tax on mine profits.
Macarthur Coal continued to lose ground following the decision by US coal giant Peabody to reduce its offer to $15 per share in the light of the government’s super tax. The company’s shares closed at $13.12 each.
Gold plays, Newcrest and Lihir were down 0.7% and 0.5% as the precious metal showed surprising resilience to yesterday’s flight to riskier and more rewarding investments.
Fortescue slumped 22c, or 5.0% to $4.16.
In the materials sector, Incitec Pivot lost 12c, or 3.8% to $3.06. The fertiliser manufacturer received mixed reviews in this morning’s broker reports following a profit announcement yesterday, which was bolstered by a reduction in one-off impairments.
Energy stocks were 1.4% lower as Woodside, the sector’s largest stock, losing 78c, or 1.8% to $42.68.
Oil Search and Origin shed 1.1% and 1.2% to $5.58 and $15.08.
Paladin shares were up 1.3% to $4.00 each as Canadian miner Uranium One continues to snap up shares in the Aussie miner.
Qantas rallied 6c, or 2.3% to $2.64, while smaller rival Virgin Blue slid 1% to 51c after two analysts confirmed ‘buy’ ratings on the airliners.
The Industrials sector was flat.
Seven Holdings, which moved from the media space down to Industrials following its merger with Westrac, lost 31c, or 4.3% to $6.82.
Brambles gained 0.6% to $7.00 and Leighton shed 0.5% to $34.10.
Consumer Discretionary stocks were mixed resulting in the sector only being down 0.1%.
JB Hi-Fi put on 31c, or 1.6% to $19.28 to be the strongest among the retailers.
Flight Centre reversed early gains to close 34c lower at $18.21.
Consumer Staples slid 0.7% after Wesfarmers lost 1% to $28.40.
Telstra edged 2c lower to $3.03, while the broader Telecommunications sector was 0.7% below the gain line.
Around the region, the Nikkei 225 shed 119.6 to 10,411.1, while the NZSE50 dipped 3.6 to 3,167.0. The Strait Times Index lost 27.7 to 2,852.8. The Hang Seng fell 291.3 to 20,135.4.
Spot gold was trading at US$1,205.86 per ounce, while the Aussie was buying US$0.8958.
Asciano to book $1.1b in impairments
Asciano, this morning said it had decided it would book $1.11b in impairment charges for the second half of the year on the advice of the company’s audit and risk committee. However the port and rail operator said it that its earnings guidance would remain the same for the latter half of the year.
At the close, Asciano shares were trading down 1.5c to $1.64.
Ausenco awarded $53m Kestrel contract
Ausenco has been awarded a $53m contract to manage underground, surface infrastructure construction and coal preparation plant upgrade work for the Kestrel Joint Venture’s mine in Central Queensland. The company said separately that it expects to see growth into the second half of 2010 and into 2011 as a result of further improved business conditions and the implementation of sustainable growth initiatives.
By the finish, Ausenco shares were down 21c to $4.07.
IAG wary of unsolicited offers
Insurance Australia Group warned shareholders they may receive unsolicited offers that significantly undervalue their shares. The company said a company trading as Hassle Free Share Sales Pty Ltd has been contacting holders of IAG shares.
At the end of the day, IAG shares were down 5c to $3.70.
TSI to sell wind farm, tap market for $110m
Transfield Services Infrastructure Fund, which is 47.5% owned by Transfield Services, announced its intention to sell its Mt Millar Wind Farm in South Australia for $191m. The fund also said it would tap the market for $110 million as part of a series of initiatives that are expected to provide financial flexibility and strengthen the fund’s balance sheet.
At the close, TSI shares were halted at 90c, while TSE shares were down 6c to $3.96.
