China sell-off hits local shares
The Australian sharemarket finished lower today, as investors continued to sell-off mining stocks amid poor performances from Chinese indexes.
Finishing on the day’s low, the benchmark S&P/ASX200 fell 29 points, or 0.6 per cent, to 5117.9, while the broader All Ordinaries lost 31.4 points, or 0.6 per cent, to 5128.6.
Losses on the Shanghai index and a fall in local business confidence gave investors further reason to turn away from resources stocks as miners delay major projects and look to cut costs with demand from China easing.
‘‘[Miners] are going to remain captive to Chinese sentiment until there’s a definitive turnaround. I don’t think you’re going to see investors embrace it too much,’’ said executive director at JBWere Mike Kendall.
BHP slipped just under half a per cent to $35.67, while rival Rio Tinto, which will reportedly cut investments in Guinea, dropped 1.9 per cent to $61.92. Fortescue Metals finished down 3 per cent at $4.24.
Mr Kendall said investors were chasing yields and resources companies were ‘‘notorious for not paying fantastic levels of dividends’’.
A drop in the iron ore price to $US144.1 per tonne, its lowest level this year, also hurt miners. Mr Kendall said most analysts saw iron ore prices returning closer to the long-term average around $US120.
Commonwealth Bank continued to trade at record highs, finishing at $70.58. The bank is close to becoming to ASX’s most valuable stock with a market cap of $113.6 billion. BHP currently holds that title with a market cap of $114.6 billion.
All the other major banks finished down around half a cent.
Woodside Petroleum shares fell 1.7 per cent to $36.75, as the company’s $40 billion Browse gas project in Western Australia looks less likely to go ahead.
With its largest shareholder Nathan Tinkler facing the NSW Supreme Court over the liquidation of his private company Mulsanne Resources, Whitehaven Coal shares continued their slide, down 5.5 per cent to $2.39.
Pharmaxis, after poor earnings results and setbacks with US regulators, replaced its chief executive. Failing to impress investors, the pharmaceuticals company’s shares lost 8.4 per cent to 54.5 cents.
And the Australian dollar moved to new four-and-a-half year highs against the yen, at 99.233 yen in late trading, fuelled by the Bank of Japan’s monetary stimulus policy.
Deutsche Bank head of fixed income David Plank said the dollar’s move above 100 yen was inevitable.
‘‘One of the notable market features of the last quarter of 2012 and the first month of 2013 was yen weakness. Against the dollar the yen lost almost 20 per cent over this period,’’ said Mr Plank.
He said March had seen renewed weakness, with the dollar moving above 98 yen last week, and further this week, for the first time since August 2008