Australian Indexes Weak on Gold Rout

Marcus Jacob
16 Apr, 2013
New York City

Australian markets opened lower but in the late afternoon trimmed losses. Gold plunged 10% and resource sector linked stocks led the decliners. RBA is on hold to let the rate cuts work through the system and held out the possibilities of future cuts.

[R]6:30 PM Sydney – Australian markets opened lower but in the late afternoon trimmed losses. Gold plunged 10% and resource sector linked stocks led the decliners. RBA is on hold to let the rate cuts work through the system and held out the possibilities of future cuts.[/R]

Stocks in Sydney opened sharply lower after gold prices plunged more than 10% in New York and London trading.

The weakness in the precious market spilled over to the base metal trading and prices of copper, aluminum and zinc declined more than 3%.

Investors in New York and Europe dumped gold after China reported lower than expected economic growth and Cyprus said it will sell its 40 ton of gold to meet international lenders demand.

Though the demand from gold buyers has not declined but the slower economic growths in India and China are likely to curb the new demand for precious metals. More than 50% of gold bought in the last three years is held by financial investors as a hedge against the inflation.

The ASX 200 index fell 17.10 to 4,950.80 and the broader All Ordinaries slid 22.70 to 4,944.10.

Australian dollar closed up $1.037 and in stock trading, turnover increased to 910 million shares worth $4.4 billion.

Reserve Bank of Australian in its latest minutes of meeting held on April 2 noted that the two weakest sectors of the economy, housing and retail, are improving with the help of low rates.

However, the central bank also said it will take some time for the recent rate cuts to work through the economy but it is prepared to cut rates more if necessary.

Australian automobile sales declined 0.6% in March from previous month, according to the Australian Bureau of Statistics.

Total of 95,113 vehicles were sold in the month.

Stock Movers

Miners led the decliners and gold miners led the sharp fall in trading today.

Rio Tinto slid 11 cents to $54.98 and BHP fell 16 cents to $32.15. Fortescue Metals Group lowered 1 cent to $3.75.

Woodside Petroleum slumped 62 cents to $35.38 and Santos dropped 27 cents to $12.13.

Newcrest Mining, the gold and silver miner, plummeted 92 cents or 5.1% to $17, Kingsgate declined 16 cents or 5.4% to $2.80 and Whitehaven Coal fell 5 cents to $2.02.

David Jones Limited gained 5 cents to $2.89 and Breville Group closed unchanged at $6.60. Billabong dropped 2.5 cents or 4.8% to 49.5 cents.

Woolworths increased 30 cents to $34.76. Kathmandu closed unchanged at $1.99.

Toll Holdings slid 4 cents to $5.54, Leighton down 16 cents to 19.25 and Mirvac Group added 1 cent to $1.72. Lend Lease lowered 1 cent to $10.45.

Westpac slipped 9 cents to $31.50, Commonwealth fell 0.5% to $68.14 and National Australia Bank rose 0.6% to $31.83 and ANZ added 7 cents to $28.86.

Macquarie Group slid 35 cents to $36.75 and Wesfarmers closed unchanged at $40.68.

Nufarm fell 9 cents to $4.07. Linc Energy dropped 8 cent or 4.1% to $1.88.

Quickflix Limited gained after the U.S. based pay channel HBO shows will stream in Australia.