Australian Stocks Edged Lower, Service Sector Contracts

Marcus Jacob
05 Jan, 2012
New York City

Australian stocks declined in thin trading after rallying for the first two days after German debt auction attracted fewer than expected bids and ahead of French debt auction later today. Resources linked stocks were on the defensive. Service sector contracted in December.

[R]8:00 PM Sydney – Australian stocks declined after rallying for the first two days after German debt auction attracted fewer than expected bids and ahead of French debt auction later today. Australian service sector contracted in December.[/R]

The positive mood of the first two days of trading in Sydney turned negative after European debt worries resurfaced. Investors were also on the sidelines ahead of the French debt auction later today and after a weak German debt sale yesterday.

In addition, investors sold stocks in Europe after Italy based UniCredit SpA agreed to riase 7.5 billion euros at a deep discount of 43%.

The ASX 200 index closed down 45.10 or 1.1% to 4,142.7 and All Ordinaries index decreased 42.9 or 1% to 4,196.6.

In trading, 1.2 billion shares changed hands worth $2.7 billion and for every two stock that closed higher seven declined.

The Australian dollar edged higher and closed at US$1.030.

Australian service sector contracted in December according to the latest data released by the Australian Industry Group and Commonwealth Bank. The performance of Service Index or PSI increased 1.3 point to 49 points. The reading below indicates a decline.

The business service sector showed a better reading but all other services sectors faced strong headwinds as the two-speed economy of Australia suffered from high dollar and ongoing debt turmoil in the euro zone.

Stock Movers

BHP Billiton Ltd fell $0.40 to $35.82 and Rio Tinto Ltd decreased $0.30 to $62.85.

Fortescue Metals Group fell 11 cents to $4.51, Lynas Corporation Limited closed down 5 cent to $1.07 and Iluka Resources fell $0.32 to $15.53.

Oil Search Limited traded down 4 cents to $6.37, Santos Limited fell 37 cents to $12.28 and Woodside Petroleum decreased $0.28 cents to $31.12.

Commonwealth Bank of Australia decreased 19 cents to $20.33 and National Australia Bank fell 47 cents to $23.73. ANZ edged down 28 cents to $20.74. Westpac inched lower 19 cents to $20.30.

Cochlear fell $0.57 to $61.40.

David Jones Limited closed up 2 cents to $2.42 and Wesfarmers Limited decreased 21 cent to $30.54. Harvey Norman Holdings closed down 2 cents to $1.86.

Woolworths Limited closed down 24 cents to $25.47 and JB Hi-Fi Limited increased $0.08 to $11.58. Billabong International Ltd fell 2 cents to $1.82 and Kathmandu fell 1 cent to $1.30.

Qantas Airways Ltd closed down 2 cents to $1.52, Virgin Australia closed down 0.5 cent to 29.50 cents and Flight Centre decreased $0.04 to $16.80.

QBE Insurance Group Limited decreased 17 cents to $13.15 and Insurance Australia Group decreased 5 cents to $3.

QR National added 6 cents to $3.56.