This
is Australia...We will have to wait a few hours to see what the
reaction of the European and US markets to the political news in
Europe. The NZ market does not seem to have reacted to the news.
Australia:
Spooked investors wipe $27b off shares
The
Australian sharemarket took a heavy beating today, as fears the
French and Greek election results could derail the collective
response to the eurozone debt crisis sent spooked investors running
for the exits.
7
May, 2012
The
Australian sharemarket took a heavy beating today, as fears the
French and Greek election results could derail the collective
response to the eurozone debt crisis sent spooked investors running
for the exits.
The
benchmark S&P/ASX200 index plunged 94.7 points, or 2.15 per cent,
to 4301.3, posting its biggest loss since mid-December. The broader
All Ordinaries index fell 97.8 points, or 2.2 per cent, to 4361.6.
The
sell-off marked the worst day of the year for the local market,
wiping more than $27 billion off the value of shares.
The
election results threaten a fragile political consensus that has kept
Europe's currency bloc intact through more than two years of crisis,
forcing investors globally to dump risky assets.
"Markets
were already facing a weak start following negative leads from the
US. Election outcomes in Europe have only led to a brutal sell-off,"
IG markets said in a report to clients.
Wall
Street ended its worst week this year with a sharp sell-off on Friday
after a slowdown in job creation in the world's top economy raised
the biggest question mark yet about the prospects for US growth.
US
+ elections = 'ugly confluence'
Markets
reacted with alarm to Socialist candidate Francois Hollande’s
victory in France’s presidential election and the routing of
Greece’s two-party coalition, which had imposed harsh austerity
measures in return for an international bailout.
CMC
Markets chief markets strategist Michael McCarthy said the
developments in France and especially Greece, plus the
lower-than-expected number of new jobs in the US had created ‘‘an
ugly confluence’’.
‘‘The
biggest concern for the market is Greece,’’ he said. ‘‘While
it remains insignificant economically, the potential for them to
reject the required reforms seems to be high.
‘‘If
that’s the case, the damage here is political - there’s a chance
that they will have to exit the euro, and if that happens, it’s
very bad news.
‘‘Overall,
it’s a revision downward of global growth.’’
Mr
McCarthy said some encouraging Australian retail and residential
building figures for March, which were released on Monday, had not
been enough to generate any optimism among investors.
Big
miners lead sell-off
On
the local market, mining stocks were hit the hardest as investors
fear a global slowdown, driving the materials sub-index down 3.6 per
cent.
Global
miner BHP Billiton was $1.46, or 4.1 per cent, lower at $34.57, and
Rio Tinto dropped $2.91, or 4.5 per cent, to $62.00. Both stocks
ended the day at the lowest level in four months.
Whitehaven
Coal was 31 cents weaker at $4.60 after it launched a $172 million
offer for NSW coal explorer Coalworks. Coalworks was 14 cents higher
at 99.5 cents.
Explosives
supplier Orica was down 14 cents at $26.40, after chemical leaks at
its ammonia plant near Newcastle in NSW contributed to a four per
cent drop in the company’s first half net profit.
Construction
firm Leighton descended 71 cents to $19.25 after it said the
completion date for Brisbane’s Airport Link toll road had been
pushed back by almost two months.
Big
banks lose less than market
The
financial sector outperformed the broader market, dropping 1.4 per
cent. Among the major banks, Commonwealth Bank retreated 56 cents to
$52.06, ANZ was cents 34 cents lower at $23.10, National Australia
Bank dumped 43 cents at $24.71, and Westpac reversed 19 cents to
$22.72.
Building
products supplier Alesco firmed six cents to $2.10 as it urged its
shareholders to take no action on a $188 million takeover offer from
DuluxGroup until it has further details of the offer.
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