The Australian sharemarket extended its retreat as the slump in post-election consumer confidence was compounded by news Holden would cease to make cars in Australia by 2017.
The S&P/ASX 200 index traded sideways 0.3 per cent in the red until lunch, but selling accelerated, leaving the index 39.3 points, or 0.77 per cent, down at 5104.2 points following the announcement by Holden and news of a US budget deal that raised the odds of US Federal Reserve tapering.
The Australian dollar, the strength of which over the past decade was blamed by Holden for its decision, eased from its overnight high of US91.65¢ to US91.30¢, while government 10-year yields dropped 4.6 points to 4.342 per cent after the 4.8 per cent slump in consumer confidence pointed to weak Christmas sales and lower rates next year.
“Clearly, as 2013 end household are starting to get nervous about jobs again,” Westpac economist Justin Smirk said.
“All occupations are getting more nervous but managers and professional are still the most worried. Interestingly, households without children are the more worried than those who have them.”
Raising risks for the speculative surge in Sydney house prices, he said Sydney was the “most worried city”, followed by Melbourne.
Overnight sentiment was confused as US stocks slipped 0.3 per cent and US 10-year bonds yields also slipped 4 points to 2.80 per cent as mostly weak data raised Fed tapering doubts.
The Shanghai composite index was off 1.1 per cent at the close of the ASX as short term money markets eased but 10-year bond yields rose 3 points to 4.68 per cent, increasing the risks of corporate defaults next year as a record amount of debt matures.
In Tokyo the Nikkei index was off one per cent.
Gold jumped one per cent to $US1260 an ounce, copper climbed 0.6 per cent to $US7150 a tonne and spot iron ore was little changed at $US139.40 a tonne.
In reviewing the year, Westpac economist Huw McKay said expectations of a solid acceleration in growth across the major developed economies had not been realised.
“Indeed, with China’s slowdown bottoming-out mid year and a notable weakening across other emerging markets, growth globally is expected to register 2.8 per cent for 2013, down from 3.2 per cent in 2012,” he said.
The Westpac-Melbourne Institute confidence barometer for December showed a 4.8 per cent slide, which caused a slide in banking stocks, City Index senior market analyst Kara Ordway said.
"It probably created some general poor feeling in terms of sentiment this morning but that poor sentiment was already there,” she said.
"Financials, obviously, were on those record highs over the past couple of weeks so there was always bound to be some consolidation going into year end."
Commonwealth Bank shed 76 cents to $74.50, Westpac lost 31 cents to $30.88, National Australia Bank dropped 30 cents to $32.87 and ANZ shed 19 cents to $30.59.
Resources stocks were dragged down by miner OZ Minerals’ forecast of lacklustre production levels for next year.
OZ Minerals’ shares dropped 44 cents, or 14.2 per cent, to $2.65.
BHP Billiton lost 64 cents to $36.18, Rio Tinto shed 40 cents to $65.77 and Fortescue Metals lost three cents to $5.60.
But gold miner Newcrest added 56 cents, or 8 per cent, to $7.55 as the price of the precious metal appreciated.
The broader All Ordinaries index was down 36.7 points, or 0.71 per cent, at 5109.5 points.
The December share price index futures contract was down 39 points at 5108 points, with 30,455 contracts traded.
National turnover was 1.47 billion securities worth $3.74 billion.