Weak commodity prices push market lower
At the close, the benchmark S&P/ASX 200 Index was 19.1 points, or 0.37 per cent, lower at 5142.5, while the broader All Ordinaries was down 18.1 points, or 0.35 per cent, at 5138.4.
RBS Morgans client adviser Alistair McCorquodale said the big miners led the falls on Thursday, but losses were widespread.
"Commodity prices provided weaker leads, and that's certainly led to softness in our market," Mr McCorquodale said.
A Goldman Sachs report suggesting Australian bank stocks were too expensive also contributed to the softness.
Healthcare, oil and gas and mining services stocks were some of the only bright spots on the local market.
The major banks all fell after the Goldman Sachs report, with National Australia Bank down 15¢ to $32.74, ANZ shedding 17¢ to $29.60, Commonwealth Bank dropping 36¢ to $72.92, while Westpac fell by 14¢ to $31.48. BHP Billiton was 26¢ lower at $35.28, Rio Tinto was down 36¢ at $61.19, and the iron ore miner Fortescue was flat at $4.42.
Making news, Newcrest Mining shares fell 1.5 per cent to $13.20 after the man hired by the company to investigate its disclosure scandal found no "smoking gun".
Air New Zealand has received approval to lift its stake in Virgin Australia to nearly 26 per cent. Virgin shares fell 0.5 per cent, or 1.2 per cent, lower at 41.5¢.
Meanwhile, the dollar was firmer, but off the earlier highs it reached after data showed a rise in imports in July.
Late on Thursday, it was trading at US91.56¢, up from US91.29¢ on Wednesday. The currency hit an intraday high of US91.85¢ after official data showed Australia posted a $765 million trade deficit in July, following a $243 million surplus in June.
Commonwealth Bank currency strategist Joseph Capurso said traders initially read the 4 per cent growth in imports during July as a sign of a buoyant Australian economy, as export growth remained flat. "It gave the Aussie a little bit of a boost but pretty much since then has come off," he said.
A closer inspection revealed oil made up much of the imports increase, leading to a drop in the currency again, with traders still expecting another possible interest rate cut.
Frequently Asked Questions about this Article…
The S&P/ASX 200 slipped 19.1 points (0.37%) to 5,142.5 on Thursday, while the All Ordinaries fell 18.1 points (0.35%) to 5,138.4. The decline was driven mainly by falls in resources and banking stocks, with weaker commodity prices and negative research on bank valuations cited as key reasons.
All of the major banks fell after a Goldman Sachs report suggested Australian bank stocks were too expensive. At the close National Australia Bank was down 15c to $32.74, ANZ fell 17c to $29.60, Commonwealth Bank dropped 36c to $72.92, and Westpac eased 14c to $31.48.
Big miners led losses as commodity prices weakened. BHP Billiton was 26c lower at $35.28 and Rio Tinto fell 36c to $61.19. Iron ore miner Fortescue was flat at $4.42. RBS Morgans noted the big miners were among the main drivers of the market softness.
Healthcare, oil and gas, and mining services were some of the only bright spots on the local market during the session, providing relative strength while banks and major miners weakened.
Newcrest Mining shares fell about 1.5% to $13.20 after the independent investigator hired to look into the company's disclosure scandal reported finding no "smoking gun." The market reacted negatively to the ongoing news flow around the investigation.
Air New Zealand received approval to lift its stake in Virgin Australia to nearly 26%. Following that news, Virgin shares fell about 0.5% (reported as 1.2% lower in the article) to 41.5 cents.
The Aussie was firmer late in the session at US91.56c, up from US91.29c, though below an intraday high of US91.85c. Traders initially boosted the currency after data showed a 4% rise in imports in July, but a closer look revealed oil made up much of the import increase and July's $765 million trade deficit (versus a $243 million surplus in June) pushed the currency back down, with traders still pricing in the possibility of another interest-rate cut.
This update highlights that weaker commodity prices and concerns about bank valuations can quickly weigh on the broader market. Investors may want to monitor commodity price trends, broker research on bank valuations, company-specific developments (like Newcrest's investigation and Air New Zealand's stake in Virgin), and currency and trade data that can affect market sentiment.
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