Aust stocks fall after commodities slump

On Monday 26 September 2011, 16:48 EST

The Australian share market fell more than one per cent to a two-year low, pulled down by investors selling out of miners and energy companies after commodity prices slumped.
Gold miners led the tumble after the price of gold dropped by more than $US150 over the weekend.
Stocks started the day in positive territory following German Chancellor Angela Merkel's hour-long television interview, which renewed talks of a possible Greek bailout.
But within afew hours the local bourse began shedding value, with both major indices dropping well below the 4,000-point mark to the lowest since July 2009, when the market was emerging from the depths of the global financial crisis.
The benchmark S&P/ASX200 index fell 39.3 points, or one per cent, to 3,863.9, while the broader All Ordinaries index slumped 50.9 points, or 1.3 per cent, to 3,927.6, the lowest since July 2009.
On the ASX 24, the December share price index futures contract was down 48 points at 3,882, with 49,095 contracts traded.
RBS Morgans Ipswich manager Tony Russell said overseas investors had sold out of miners and energy companies after commodities' weak performance on the weekend.
Both the materials and energy sectors plummeted by 3.9 per cent.
"A lot of money flowed into commodities as a safe haven in the last 12 months and maybe there's some profit taking ... we've seen a sell off there and the ongoing effect of that is being reflected in (major material stocks)," he said.
Gold slumped late on Friday because of renewed strength in the US dollar and talk of hedge fund liquidation wrecking its safe-haven status.
The spot price of gold in Sydney was $US1,581.89 per fine ounce, down $US163.82 from Friday's close of $US1,745.71.
Australia's biggest gold miner Newcrest also tumbled $3.24, or nine per cent, to $32.86, and was the worst performer among the top 50 companies.
Mining giant Rio Tinto shed 3.9 per cent, or $2.45, to $60.20 and fellow miner BHP Billiton fell 60 cents, or 1.74 per cent to $33.95.
Rare earth explorer Lynas Corporation was the worst performing stock on the S&P/ASX 100, plummeting 17.1 per cent to 87.5 cents.
The best performing stock on the same index was James Hardie Industries, which gained 5.52 per cent to $5.73.
Energy stocks also slipped after world oil prices slumped. Santos fell 45 cents, or 4.15 per cent, to $10.40 and Woodside Petroleum lost $1.57 to $29.80.
Mr Russell said trading volumes were moderate, reflecting a lack of buyers.
Turnover was 2.51 billion shares changing hands for $5.74 billion, with about seven out of every ten stocks falling.
Typically defensive health care stocks outperformed, up 1.45 per cent, with medical diagnostic company Sonic Healthcare gaining 2.6 per cent to $11.58.
The financial sector recovered slightly from a major sell-off last week to close 0.75 per cent up, after a significant rebound in European bank stocks on Friday.
All the major retail banks rose in value, with Westpac the strongest performer, up 2.46 per cent at $19.19.
Supermarket giant Woolworths gained 20 cents to $24.77 after it reiterated its forecast of a two- to six-per cent increase in this year's net profit.
Burrell Stockbroking adviser Jamie Elgar said he expected bouts of volatility to continue in coming weeks, with any rise in the market tentative on ongoing uncertainty.

53 comments

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A Yahoo!7 User 7 minutes ago Report Abuse
Gold at $800 in 12 months
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Zylock 39 minutes ago Report Abuse
So gold has dropped a tiny amount. It has a hell of a long way to fall to an acceptable level. remember it is a commodity when it get back to a realistic price like 1986 then I will consider investing in a few bars. But for the past 30 years gold market has been strongly manipulated and is out of sink with what it should be- I will keep the cash under my pillow - beside the gun
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Deste 2 hours ago Report Abuse
Wonder why we don't have a fixed currency? Partially to balance trade. Notice how China has a huge surplus? To maintain that surplus and competitive exports they need to fix their exchange rate by buying US debt or dollars to depreciate their currency so more can be exported into the US economy. In effect they are buying jobs for Chinese exporters. So there is a voracious desire for US debt from middle eastern oil exporters and asian nations so they can export more into the United States. Otherwise it automatically rebalances as exports appreciate the demand for the currency increases and game over. As some Macroeconomists say: If the US deficit is left alone it will rebalance itself.
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Raji s 2 hours ago Report Abuse
Robert! And Greed Begets And Greed Begets but Why are Jewish people always Rich esp in USA and Europe.... their greed is who they are today. Good Luck if you you can make it !
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Fairsky 2 hours ago Report Abuse
Buy in and beware.
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Robert 2 hours ago Report Abuse
And greed begets greed begets greed. A war cannot be won unless you know your enemy! Greed is the biggest enemy of the human race and always has been. Untill this is recognised we will always be fighting a losing battle. Unfortunately, most of us will respond with quick retorts like" how"? and "that could never happen" or "you're talking about a utopia which would be impossible for man to achieve"!

There could never be a simple answer which we could quickly dispute in order to justify why its not possible, instead we must fully understand, realise and accept this fact then we will know the enemy and then concentrate and devise "the way" to mount the most crucial attack on this biggest war to face our race. Fanciful stuff? maybe, but allow yourself a few moments to imagine the outcome if we could learn to be motivated by "giving" in accordance with the needs of others instead of what we have always used ie. "getting" for ourselves. PLease do yourself a favour before being critical and just imagine. No great achievements are ever easy, this would be the greatest victory and IT IS POSSIBLE.
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ymir 2 hours ago Report Abuse
I greatly agree with your comment Rob.

The US is trying to use the policy of monetarism in order to cope with the deepening financial crisis. But it's no way for the US but a deeper impact of the crisis. Its the law of capitalism.
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tom j 2 hours ago Report Abuse
gold u reken..why would u give advice to someone u dont know .answer -- why not
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Donald 3 hours ago Report Abuse
nows the time to hit ebay usa! in a few weeks it will be back in the low 90s and in a month high 80s.

property will crash a little more yet, china is so competetive that the west will never compete..every time people think there house will double in ten years just slap em with the China stick over the back of the head and say " wake up" the property ship sailed 3 years ago and she wont be back to pick up more passenegers for another 20-30 years..same with wage growth, CANT COMPETE WITH CHINA!
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Hypocritical Charlatan 3 hours ago Report Abuse
Gold will eventually lost it's lustre as European banks and other nations affected by economic crisis will unload their gold reserves for a hard cash to help prop-up their economy. This reminds me of previous economic crisis of 1998 when the Central Bank of England liquidised it's gold. It pushed down the price of gold to just less than $10 dollars per gram and forced some african gold mining companies to streamline their production with some even went out of business.
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Monday, 26 September 2011