The sharemarket lost ground today after Europe’s leaders failed to strike a crucial deal on a Greek bailout for the second week in a row.
Mining stocks were big drivers of the slide, with risk averse traders selling off cyclical stocks that depend on economic growth.
Bellwether stocks BHP Billiton fell 22 cents, to $33.36, while Rio Tinto lost nearly 1 per cent, to $56.95.
Healthcare and retail stocks suffered some of the day’s biggest losses, with the embarrassing overnight failure of Click Frenzy’s website compounding the sombre mood for retailers.
Overall, the benchmark S&P/ASX200 fell 16.2 points, to 4369.5 points, while the broader All Ords dropped 16.8 points, to 4390.7 points.
The sharemarket was directionless for much of the day thanks to mixed leads from Wall Street and Europe overnight.
But come mid-afternoon and the mood turned sour after European authorities, including representatives from the International Monetary Fund and European Central Bank, failed to reach consensus on the best way to reduce Greece’s debt burden, without which Athens cannot receive financial assistance.
The news saw the market close down 16 points as the Dow futures dropped 44 points, and the S&P 500 futures dropped 0.6 per cent, pointing to losses at the start of trade on Wall Street.
The dollar lost ground against a broadly stronger US dollar, slipping to $US1.0352 from $US1.0384.
Westpac’s global head of interest rates strategy and international markets, Russell Jones, said the slump in shares was due to Australia importing more bad news from Europe.
“The meeting of European finance ministers broke up without a meaningful deal of the Greek bailout coming through. I think the markets are expressing their disappointment with that,” he said. “It’s clearly proving very difficult to get any kind of consensus on a long-term solution to Greece’s problems.”
Mr Jones said things were unlikely to pick up any time soon.
“For the moment at least, we’re in a situation where all the international news is troubling. You’ve not just got Europe failing to address its problems, but you’ve got all the uncertainties around US budget position,” he said. “Maybe what we need is for Mr Stevens to cut rates in December.”
Among local stocks, department store chain David Jones dipped 6.2 per cent, to $2.41 after first quarter profit inched higher, ending seven straight quarters of decline but missing analyst forecasts.
Ord Minnett senior analyst Craig Turton said the retail sector came under renewed pressure after David Jones’ sales data were weaker than expected.
“I think there could be some overlay with Click Frenzy website breaking down overnight, because Myers sales came in in-line with expectations last week, but it has lost ground today, along with David Jones,” he said. “These guys are trying to develop online strategies, and the initial experience with Click Frenzy wasn’t particularly good as a starting point.”
Meanwhile, the volatility of recent months continued for highly geared iron ore producer Fortescue Metals, whose stocks dropped 11 cents, or 2.74 per cent, to $3.90, making it the second worst performer among the top 50 ASX companies.