Nervous investors send market to lower close
Global equity markets remained on a knife edge ahead of the Greek parliamentary confidence vote tomorrow, with the Australian sharemarket finishing a choppy session at a fresh 10-month low.
European leaders dashed hopes of a weekend solution to the Greek sovereign debt crisis, and the S&P-ASX 200 surrendered two morning rallies to close 33.2 points or 0.74 per cent down at 4451.7 points, as weak regional data added to the gloomy outlook.
The broader All Ordinaries index was 38.6 points or 0.84 per cent lower at 4,512.5, the day’s low.
The Japanese economy tumbled into a $10.1 billion trade deficit in May as exports slumped 12.4 per cent, while Chinese interbank overnight SHIBOR lending rate soared from 3.86 per cent to 6.83 per cent, indicating an acute cash shortage in China.
German radio reported today that German Finance Minister Wolfgang Schaeuble said Greece must deliver deficit-reduction steps before further loan payments can be approved.
Weekend reports suggested Greece would receive half of a €12 billion payment for July, but EU officials are set to wait until after the Greek parliamentary confidence vote and acceptance of an austerity package before approving any payment.
Japan’s Nikkei index finished marginally higher, while the Shanghai composite index was off 1.2 per cent at the Sydney close.
Copper led base metals lower on concern over global demand, falling 1.3 per cent to $US8980 a tonne, while nickel dropped to a one per cent low of $US21,441 a tonne.
Gold held steady at $US1539 an ounce, but the Australian dollar reversed early gains to $US1.0610, slipping to $US1.0530 as investor appetite deteriorated throughout the day. The Australian dollar price of gold climbed to a one-year high of $1460.60 an ounce.
IG Markets analyst Ben Potter said investors were concerned with both the macro economic outlook and local conditions.
“The market is selling into any sign of strength at the moment,” Mr Potter told AAP.
“People don’t see the strength lasting, so they are taking the chance to jump ship.”
The latest in a series of earnings downgrades by industrials, this time by Caltex Australia, didn’t help to improve sentiment.
Caltex downgraded its first half profit guidance to between $100 to $115 million, prompting its shares to lose 78 cents, or 6.85 per cent, to $10.60.
It was the worst performer among the S&P top 100 companies on the ASX.
The major resource companies also fared poorly. BHP Billiton lost 59 cents, or 1.41 per cent, to $41.36, while Rio Tinto was down 52 cents, or 0.67 per cent, at $77.30.
Mr Potter said local conditions, including the strong Australian dollar, potential for an interest rate rise and tight consumer discretionary spending were concerning investors.
“Australia has so many other headwinds on top of the problems globally,” Mr Potter said.
“There is a bit focus overseas, but the local concerns are still weighing on the back of people’s minds.”
The major banks also sank in late trade. Commonwealth lost two cents to $49.50, Westpac was down nine cents at $21.12 and ANZ lost 10 cents to $21.24. NAB outperformed its peers to close up eight cents at $24.44.
In other news, Chi-X Australia has reached an agreement with the nation’s main stock exchange operator, Australian Securities Exchange, to provide clearing and settlement services.
Preliminary national turnover was 2.3 billion shares worth $4.7 billion, with 331 stocks up, 875 down and 376 unchanged
