Australian Index Dives 3.7% on Global Worries; Cochlear Plunges 20%

Marcus Jacob
12 Sep, 2011
New York City

The Australian benchmark index declined 3.7% on the global worries. The market overlooked sharp increase in China

[R]4:30 PM Sydney – The Australian benchmark index declined 3.7% on the global worries. The market overlooked sharp increase in China’s import and export and bank lending but focused on the euro zone. Cochlear plunged as much as 27% on its first recall of hearing implants.[/R]

The Australian index dropped 3.7% on the global worries that dragged indexes in Asia. The market index in India, Hong Kong, Singapore and in Japan declined more than 2%

The latest round of worries is rooted in the health of the French banks and their exposure to Greek bonds. Greece is struggling to balance its budget deficit and bond yields of more than 55% on the 2-year bonds suggest a near certainty of the government bonds.

French banks have a significant exposure to Greek government bonds. Socite Generale and BNP Paribas have struggled in the last one month of trading and stocks are down more than 40% in the period.

The ASX 200 index fell 156.2 or 3.7% to 4,038.5 and All Ordinaries index declined 152.3 or 3.6% to 4,125.1.

The Australian dollar closed down 1.2% to US$1.0372 and gold price decreased $22.80 to US$1,850.20.

Investors overlooked better than expected import exports data from China. Exports in August increased 24.5% and imports rose 30% from a year ago. Bank loans increased to 580 billion renminbi or $91 billion.

Stock Movers

Cochlear, the maker of hearing implants plunged 20% or $14.68 to $57.50 after the company announced a recall of a range of implant.

The company recalled Nucleus CI500 range of hearing implants, its first recall and said financial impacts of the recall is unknown. The previous model and external devices like Nucleus 5 CP810 are not subject to the recall.

Analysts were quick to lower earnings by 10%.

BHP Billiton Ltd decreased $1.46 to $36.45 and Rio Tinto fell $3.05 to $68.20. Newcrest Mining Limited added 0.8% to $39.86 and Atlas Iron decreased 1 cent to $3.69.

Suncorp dropped 47 cents to $7.85 and was the largest decliner among the top most heavily traded stocks.

Oil Search decreased 25 cents to $5.84 and Santos declined 61 cents to $10.91.

Commonwealth Bank of Australia decreased $1.96 to $45.45 and National Australia Bank fell 96 cents to $22.36. ANZ decreased 73 cents to $19.21. Westpac fell 93 cents to $19.20.

Macquarie Group decreased 97 cents to $22.03. Wesfarmers decreased 68 cents to $30.17.

Qantas Airways Limited fell 7 cents to $1.52.