Australian Index Decline Extends Weekly Loss to 2%

Marcus Jacob
09 Dec, 2011
New York City

Australian stocks closed sharply lower after European leaders haggled to implement fiscal compact and treaty changes. The decline in inflation in China also dragged market indexes to a low for the month. For the week the benchmark ASX 200 index dropped 2%.

[R]8:00 PM Sydney – Australian stocks closed sharply lower after the European leaders haggled to implement fiscal compact and treaty changes. The decline in inflation in China also dragged market indexes to a low for the month.[/R]

Australian stocks edged dropped on the growing worries that the European leaders’ summit is not likely to produce quick solution to the widening debt contagion in the region.

The leaders after long and drawn out meetings agreed to a fiscal compact that will restrain spending and impose penalties on nations that exceed targets but failed to agree on treaty changes. The deal for now applies to the euro zone nations plus any other nations that want to join according to sources in Brussels.

UK was the most vocal opponent to the treaty changes and preferred to have a special exception that will protect its budget and spending plans.

Investors sold stocks in Sydney and in Australia and resources linked stocks declined. Market indexes opened lower and declined sharply after China reported lower inflation indicating a probable slowdown in construction spending.

Resources linked stocks and banks led the decliners and the benchmark index ASX 200 index dropped 1.8% and closed down 2% for the week.

The ASX 200 index fell 77.7 or 1.8% to 4,203.3 and All Ordinaries index declined 1.7% or 74.8 to 4,264.10. The Australian dollar edged lower to US$1.017.

In trading, stock turnover decreased to 1.96 billion shares worth $4.2 billion and 295 shares closed higher, 656 declined and 362 were unchanged.

Stock Movers

BHP Billiton Ltd fell $1.13 to $35.86 and Rio Tinto Ltd decreased $2.35 to $63.74. Newcrest Mining declined $0.45 to $33.05.

Fortescue Metals Group decreased 12 cent to $4.72, Lynas Corporation Limited closed unchanged at $1.30 and Iluka Resources rose $0.17 to $16.85.

Oil Search Limited traded down 12 cents to $6.36, Santos Limited fell 19 cents to $12.81 and Woodside Petroleum decreased $1.01 cents to $31.89.

Commonwealth Bank of Australia fell $0.84 to $48.84 and National Australia Bank decreased 59 cents to $24.02. ANZ edged down 28 cents to $20.85. Westpac fell 46 cents to $21.07.

David Jones Limited fell 10 cents to $2.74 and Wesfarmers Limited fell 9 cents to $31.91 Harvey Norman Holdings fell 2 cents to $2.09.

IAG decreased 9 cents to $3.09 a day before when the stock surged on a speculation that it may be a takeover target.

Woolworths Limited closed down 7 cents to $25.61 and James Hardie Industries SE decreased 23 cents to $6.78.

Telstra fell 4 cents to $3.23 after the telecom operator proposed a revised restructuring agreement to the Australian competition regulator that will progressively decommission its copper network and allow government controlled National Broadband Network Co to access its telecom infrastructure.

Qantas Airways Ltd closed down 3 cents to $1.59, Virgin Australia closed unchanged at 35.5 cents and Flight Centre declined 50 cents to $18.41.

QBE Insurance Group Limited decreased 19 cents to $13.86.