MARKET CLOSE (4.30pm AEDT)
The Australian sharemarket had its biggest fall since 23 July, with the All Ordinaries Index (XAO) slumping by 1.5 per cent or 65.7 pts to 4404.2. Shares ended in the red for the fourth straight session; making it the longest losing streak for our market in four months. Relatively disappointing economic news out this morning also did the market no favours.
Global markets were quiet last night due to an American public holiday. The Dow Jones finished flat, France's CAC40 eased by 0.3 per cent, Germany's DAX rose 0.07 per cent while Italian equities (shares) fell 0.39 per cent.
All sectors on the local market slumped, with the energy, mining, financial and industrials the worst performers. BHP Billiton (BHP) dropped by 1.6 per cent or 55 cents to $33.75, while the smaller Rio Tinto (RIO) dropped by 1.65 per cent or 97 cents to $57.67. Australia's largest gold producer, Newcrest Mining (NCM) ended 2.31 per cent or 61 cents lower to $25.75.
The big four major banks all had a day they would rather forget, losing as much as 2.24 per cent today. All the majors have now gone ex-dividend, with Westpac (WBC), National Australia Bank (NAB) and ANZ Banking Group (ANZ) scheduled to pay eligible shareholders around the middle of December.
Commonwealth Bank of Australia (CBA) paid out its final dividend on 5 October. NAB was the worst performer after slipping 2.24 per cent or 53 cents to $23.11 today. WBC dropped 2.17 per cent or 55 cents to $24.80, ANZ fell 1.64 per cent or 40 cents to $24.05 while CBA lost 1.18 per cent or 70 cents to $58.70.
Seven West Media (SWM) jumped by 11.21 per cent or 13 cents to $1.29 after holding its Annual General Meeting (AGM). SWM told shareholders to expect a lower profit for the first half of the year. However, it also said it is aiming to cut costs and pay down debt.
In his AGM address, Don Voelte the Managing Director and Chief Executive said that "Our financial results over the past twelve months in a difficult market confirm the underlying strengths of your company. Our businesses are performing with strong margins in a tough and competitive market. Our television business, the Seven Network, under the leadership of Tim Worner, continues to be the number 1 free-to-air channel for the sixth straight year. More Australians watch Seven than any other television network. Importantly, Seven also leads the market in television advertising revenue share. Since the record setting year of 2011, Seven has maintained its share of all people and lifted its share of the key age 25-54 demographic. Seven currently has its highest share of age 16-54 viewers since the inception of OzTam in 2001."
Insurance giant, QBE Insurance (QBE) slid by 7.46 per cent or 88 cents to $10.92 after a big 8.31 per cent fall yesterday. On Monday, QBE told the market that its profit margins are likely to fall and its bill from Superstorm Sandy could reach as much as US$450 million. A number of firms downgraded targets for the insurer today. QBE is down 15.6 per cent this year and has lost ground for five consecutive years.
On the economic front, the National Bank Business Survey was issued and showed that conditions are still quite subdued amongst businesses. A record 72 per cent are saying that additional finance is of little interest. The Reserve Bank of Australia (RBA) has cut rates by 1.5 per cent over the past year however both businesses and consumers are not finding debt as being particularly attractive. The market is currently factoring in a 62 per cent likelihood of a rate cut in December.
Total lending rose by 4.8 per cent in September, however is still down by close to 2 per cent over the past 12 months. CommSec's Chief Economist, Craig James said that "We are still pencilling in another rate cut in February next year, and based on today's data that seems the correct approach. In fact the chances of a December move have improved. Rates are near historic lows but business conditions have become tougher, rather than easier. A high Aussie dollar, massive changes in technology, global competition and a raft of uncertainties are white-anting the Australian economy."
No major data was issued across Asia Pacific today and most markets lost ground. Shares in Shanghai performed worst after slipping by 1.51 per cent. Hong Kong's Hang Seng fell 0.93 per cent or 199.42 pts to 21230.88. Taiwan's SE Weighted index dropped 1.81 per cent or 131.7 pts to 7136 while Japan's Nikkei 225 Index eased by 0.18 per cent or 15.39 pts to 8661.05.
In Europe tonight, Finance Ministers are scheduled to meet. Typically, they discuss a range of financial issues such as government finances. The latest British inflation reading is due for release at 8.30pm (AEDT) and is expected to record a slight rise for annual inflation from 2.2 per cent to 2.3 per cent. This is considered to be one of the more important readings of inflation in the U.K, however is not expected to be a concern for some time yet. Germany's ZEW Economic Sentiment reading is due at 9pm and is likely to show a very modest improvement from -11.5 to -9.9. Any number below 0.0 indicates pessimism amongst the close to 300 German institutional investors questioned.
In the U.S, the Federal Budget Balance is due at 6am (AEDT) tomorrow morning. This looks at the difference between the government's income and expenses in October. An increase in the deficit from US$75 billion to US$113 billion is forecast by the market.
Volume of shares traded came in at 1.63 billion today, worth just $4.65 billion. 301 shares were up, 661 were weaker and 360 ended unchanged.
At 4.30pm (AEDT) on the Sydney Futures Exchange, the ASX24 futures contract is up 0.25 per cent or 11 pts to 4400.
Due to the end of daylight savings in Europe, most major European markets are now trading between 7pm (AEDT) and 3.30am (AEDT). Futures are currently pointing to a weaker start to trade tonight.
U.S futures are also pointing to a slightly lower start tonight. Due to the start of daylight savings in Australia and its end in the U.S, American markets will now be trading between 1.30am (AEDT) and 8am (AEDT).
Turning to currencies, the Australian dollar (AUD) is a little stronger than this time yesterday. One AUD buys US104.1 cents, is trading at £65.6 pence and €82.08 cents.
Australia is a commodity based economy, with commodities in general accounting for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.
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