asx down sharply as investors dump banking stocks on fears of more capital raisings 1931772015
Deal-making provides some support to investor sentiment
Australian stocks were unable to sustain initial gains and closed with sharp losses after a sell-off commenced at noon Tuesday. The big four banks led the market lower, with significant losses also following in the energy sector. Investors dumped banking stocks after ratings agency Fitch Ratings warned that the big four banks would need to raise capital even further than presently anticipated. The market ended at a seven month low.
However, some M&A news provided support to the market. Port and railroad operator Asciano Ltd (ASX:AIO) was in the limelight after it agreed to be acquired by Canadian infrastructure giant Brookfield Infrastructure Partners. Fortescue Metals Group Limited (ASX:FMG) swam against the bearish trend in the mining sector and gained nearly 8 per cent on news that it might sell off some of its mining assets, including its Chichester hub.
Indices and sectors
The benchmark S&P/ASX 200 fell 64.6 points, or 1.2 per cent, and closed at 5,303.1, while the broader All Ordinaries index was down 59.2 points, or 1.1 per cent, at 5,309.4.
The only gaining sectors were information technology (+2.25 per cent) and telecommunication services (+0.36 per cent). The biggest losers included financials (-1.99 per cent), energy (-1.79 per cent), consumer discretionary (-1.05 per cent), and utilities (-0.83 per cent).
Stocks
The big banks spearheaded losses on the market on Tuesday. Commonwealth Bank of Australia (ASX:CBA) slumped 2.71 per cent to AU$76.91, Westpac Banking Corp (ASX:WBC) fell 0.88 per cent to AU$31.66, Australia and New Zealand Banking Group (ASX:ANZ) was down nearly 2 per cent to AU$28.97 and National Australia Bank Ltd. (ASX:NAB) shed 1.55 per cent to AU$31.76. ANZ reported a modest profit of AU$5.6 billion, up 11 per cent for the nine months ended in June, and its chief executive warned that global financial conditions are likely to continue to be challenging, according to the ABC.
The energy sector was a sea of red amidst weak global crude prices. Woodside Petroleum Limited (ASX:WPL) was down 1.66 per cent to AU$32.05, Origin Energy Ltd (ASX:ORG) fell 1.78 per cent to AU$9.39, Oil Search Limited (ASX:OSH) dipped 2.29 per cent to AU$6.40 and Santos Ltd (ASX:STO) fell 2.34 per cent to AU$5.84. Offshore services and marine logistics provider MMA Offshore Ltd (ASX:MRM) crashed 11.02 per cent to AU$0.525 after it declared a full-year loss of AU$51.3 million and cut its dividend by 56 per cent. The stock was the second-biggest loser on the S&P/ASX 200.
In mining, BHP Billiton Limited (ASX:BHP) fell 0.87 per cent to AU$24.98, Rio Tinto Limited (ASX:RIO) was down 0.59 per cent to AU$50.59 and Atlas Iron Limited (ASX:AGO) slumped 10 per cent to AU$0.027. However, Fortescue Metals Group Limited (ASX:FMG) bucked the trend and surged higher by 7.88 per cent to AU$1.99. It was the top gainer on the S&P/ASX 200.
Retailers put up a somewhat mixed show. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was down 0.48 per cent to AU$39.66, Woolworths Limited (ASX:WOW) slipped 0.52 per cent to AU$26.76 and Metcash Limited (ASX:MTS) declined 0.93 per cent to AU$1.07. Heading the other way were Caltex Australia Limited (ASX:CTX) which gained 0.12 per cent to AU$32.79 and Myer Holdings Ltd (ASX:MYR) moved up 2.30 per cent to AU$1.34. Consumer electronics retailer Dick Smith Holdings Ltd (ASX:DSH) was the biggest loser on the S&P/ASX 200, falling 16.5 per cent to AU$1.67 on the release of a modest scorecard of its full-year earnings.
In airlines, Virgin Australia Holdings Ltd (ASX:VAH) moved up 2.27 per cent to AU$0.45 and Qantas Airways Limited (ASX:QAN) rose 0.80 per cent to AU$3.79.
Rail and port operator Asciano Ltd (ASX:AIO) shot up 7.15 per cent to AU$8.69 after it accepted a takeover bid from Brookfield Infrastructure at an implied value of AU$9.15 per share. The stock was the second-biggest gainer on the S&P/ASX 200.
Economic news, currency and market outlook
The Reserve Bank of Australia released the minutes of its August board meeting and said that the depreciation recently witnessed in the Australian dollar was helping the economy towards a stronger growth in exports, and adjusting from the decade-long period of mining investment, according to The Australian.
On Wall Street on Tuesday, stocks closed lower, tracking the steep losses in Chinese stocks and a disappointing outlook from Walmart stores, according to Dow Jones. The Dow Jones Industrial Average fell 0.2 per cent to 17,511, while the S&P 500 lost 0.3 per cent to 2,097. The Nasdaq Composite gave back 0.6 per cent to 5,059.
The Australian dollar is trading slightly lower following the collapse in the Chinese stock markets which led to a downturn in Asian and European stock markets, according to the Business Spectator. At 06:30 this morning (AEST) the Australian dollar was trading at 73.44 US cents, down from 73.47 US cents on Monday.
The Australian stock market is likely to open higher given that at 06:45am (AEST) today the September ASX SPI200 Index (AP) Future contract was up 13 points at 5,283.
