Australian Index Declined 2.6%: Banks, Miners Lead Decliners

Marcus Jacob
22 Sep, 2011
New York City

Australian markets plunged following a worldwide sell off sparked by the U.S. Fed action to lower long term rates. The Fed move fell short of market expectations and indexes in Japan, India, Hong Kong and China dropped sharply.

[R]6:30 PM Sydney – Australian markets plunged following a worldwide sell off sparked by the U.S. Fed action to lower long term rates. The Fed move fell short of market expectations and indexes in Japan, India, Hong Kong and China dropped sharply.[/R]

Australian market index plunged 2.6% after markets in Asia dropped and European opened sharply lower. The U.S. Fed announcement fell short of market expectations and in addition China reported slowing economic activities in September.

The market sentiment was weak after the U.S. Federal Reserve Chairman Ben S. Bernanke’s efforts to revive the faltering economic growth fell short of the market expectations.

The Fed will sell as much as US$400 billion of short term U.S. bonds and buy bonds of maturities of at least six years to bring down the long term rates. After the decision in late afternoon yesterday, U.S. 10-year bond yield fell to 1.85% from 1.93% and the yield of 30-year bond declined to 3.02% from 3.2%.

In addition, China’s Manufacturing Purchasing Index declined to 49.4 in September from final 49.9 in August. The data tracked by HSBC are a private estimate and the government estimate is expected next week.

The index indicated shrinking manufacturing and soft landing in Chinese manufacturing and economic growth is expected to slowdown to between 8.5% and 9% in the second half from the 9.5% growth in the second quarter.

The ASX 200 index dropped 106.90 or 2.6% to 3,964.9 and All Ordinaries index fell 108.9 or 2.6% to 4,044.7. The benchmark indexes are down to a 2-year low.

The Australian dollar fell 0.2% to US$0.982 and the spot price of gold fell nearly 10% to US$1,770.60 per ounce.

Market indexes in Hong Kong plunged 4.8% and in India declined 4.1%. The Nikkei index in Tokyo dropped 2.1%.

Stock Movers

Foster’s Group Limited increased 37 cents to $5.26. The stock gained after the revised offer from SABMiller of $5.10 and 30 cents of special dividend.

BHP Billiton Ltd decreased $1.50 to $35.63 and Rio Tinto dropped $4.49 to $65.10. Newcrest Mining Limited fell $1.21 to $37.62 and Atlas Iron decreased 19 cents to $3.30.

Iluka Resources fell $1.23 to $13.27 and Paladin Energy Ltd decreased 14 cents to $1.42.

Oil Search Limited decreased 24 cent to $5.76, Santos Limited fell 37 cents to $11.12 and Woodside Petroleum declined $1.15 to $32.53.

Commonwealth Bank of Australia decreased $1.02 to $42.93 and National Australia Bank fell 67 cents to $21.52. ANZ edged 41 cents lower to $19.39. Westpac declined 39 cents to $18.92.

Qantas Airways Limited fell 6 cent to $1.47.

David Jones Limited closed down 8 cents to $2.68 and Wesfarmers decreased 49 cents to $30.17.