ASX dives as miners, energy stocks weigh
The Australian sharemarket resumed its decline after tumbling iron ore prices and oil prices hit resource stocks and talk of a deposit tax hurt the banks.
The S&P/ASX 200 index fell 73.8 points, or 1.25 per cent, to 5846.1 on solid volume, but finished off the day’s low as all sectors lost ground as investors booked profits ahead of quarter-end trading tomorrow and Easter long weekend.
Spot iron ore slumped 4 per cent to a near seven-year low of $US53.14 a tonne on Friday and Dalian iron ore futures were down 1.6 per cent today despite The People’s Bank of China governor Zhou Xiaochuan saying the government could do more to support growth in the worlds second biggest economy.
The Shanghai composite index jumped another 1.7 per cent to a fresh seven-year high after Mr Xiaochuan said the growth rate had fallen “a bit too much”.
In Tokyo the Nikkei index was up 0.7 per cent.
Brent crude oil slumped 4 per cent to $US56 a barrel as fears over the conflict in Yemen abated and attention turned to fresh pressure on the supply overhang from Iran.
Iranian and Western diplomats are working towards a nuclear deal that may lead to the Islamic Republic boosting crude exports.
The Australian dollar fell US0.8¢ to US77.20¢ as the US dollar gained traction against major currencies after US Federal Reserve chairwoman Janet Yellen stoked rate rise fears.
She reaffirmed that rates were likely to rise earlier than market expectations, but not as fast, as US data improved in the June-quarter.
HSBC economists Stephen King and James Pomeroy said in a report the world economy was looking increasingly “surreal” and policymakers were struggling to deliver the economic outcomes they’d ideally like to see.
“The usual rules of the game no longer seem to apply,” he said.
“Once confined only to the textbooks and Japan, deflation has become a major headache for central bankers across an ever-increasing number of countries. World trade growth, meanwhile, has been disappointingly weak.”
The ongoing fall in commodity prices has shaken investors’ confidence in the Australian economy, CMC Markets chief market analyst Ric Spooner said.
“Iron ore futures are lower again today,” he said.
“Weaker commodity prices led to nervousness about the Australian economy which flowed through to selling in other sectors like the banks.”
At 1.15pm, Woodside Petroleum had fallen $1.04, or 2.97 per cent, to $34.00, Santos had shed 51 cents, or 6.77 per cent, to $7.02 and Oil Search had dropped 38 cents, or 5.04 per cent, to $7.16.
Caltex Australia was down $3.44, or 9.08 per cent, at $34.44 after US energy giant Chevron sold its 50 per cent stake in the fuel distributor and seller.
Among the major miners, BHP Billiton had shed 65 cents, or 2.11 per cent, to $30.10, Rio Tinto had fallen 70 cents, or 1.24 per cent, to $55.85 and Fortescue Metals was 7.5 cents lower, or 3.75 per cent, at $1.925.
The financial sector was also weaker partly due to reports of a Federal Government plan for a bank deposits insurance levy, which could be unveiled in the May budget.
Commonwealth Bank had lost $1.24 to $93.10, National Australia Bank had declined 51 cents to $38.32, ANZ was down 44 cents at $36.36 and Westpac was seven cents weaker at $39.13.Telstra was down nine cents at $6.29.
The broader All Ordinaries index was down 72.6 points, or 1.23 per cent, at 5816.3 points.
National turnover was 1.7 billion securities worth $9.3 billion.
