the asx closed friday in the red on falling commodity prices and weak chinese factory data 176204201

Mining stocks, particularly gold miners, and the big four banks were mainly responsible for the decline on the ASX on Friday. Falling commodity prices, and news of massive job cuts weighed on miners, while a warning from ratings agency Standard and Poor’s that Australia was in danger of losing its AAA credit rating pressured the major banks. Disappointing Chinese manufacturing data sent the Australian dollar plunging below the 73 US cents level for the first time in six years, and also soured the sentiment for Australian stocks.

Indices and sectors

The benchmark S&P/ASX 200 fell 24.2 points, or 0.4 per cent, and closed at 5,566.1, while the broader All Ordinaries index was down 24.5 points, or 0.4 per cent, at 5,556.8.

The top losing sectors were consumer discretionary (-0.92 per cent), materials (-0.63 per cent), consumer staples (-0.63 per cent), real estate investment trusts (-0.56 per cent) and financials (-0.50 per cent). The sectors which gained were utilities (+0.44 per cent), energy (+0.19 per cent) and telecommunication (+0.12 per cent).

Stocks

Mining stocks closed Friday with mixed changes. BHP Billiton Limited (ASX:BHP) fell 0.90 per cent to AU$25.27, Rio Tinto Limited (ASX:RIO) was unchanged at AU$51.20, Fortescue Metals Group Limited (ASX:FMG) gained 0.91 per cent to AU$1.66 and South32 Ltd (ASX:S32) gained 2.90 per cent to AU$1.77. However, with gold prices down to fresh five-and-half-year lows, there were two gold miners in the list of top S&P/ASX 200 losers. Northern Star Resources Ltd (ASX:NST) plunged 7.76 per cent to AU$2.02 and Evolution Mining Ltd (ASX:EVN) lost 6.94 per cent to AU$1.005.

In energy stocks, Drillsearch Energy Limited (ASX:DLS), which lost 11.44 per cent to AU$0.890, was the top loser on the S&P/ASX 200. Woodside Petroleum Limited (ASX:WPL) was up 0.15 per cent to AU$33.66, Origin Energy Ltd (ASX:ORG) fell 0.36 per cent to AU$11.01, and Santos Ltd (ASX:STO) rose 0.70 per cent to AU$7.16. Oil Search Limited (ASX:OSH) gained 2.28 per cent to AU$7.19, and was among the top gainers on the S&P/ASX 200.

However, banks closed in the red across-the-board. Commonwealth Bank of Australia (ASX:CBA) fell 0.57 per cent to AU$85.81, Westpac Banking Corp (ASX:WBC) was down just 0.06 per cent to AU$34.24, Australia and New Zealand Banking Group (ASX:ANZ) fell 0.31 per cent to AU$32.05 and National Australia Bank Ltd. (ASX:NAB) shed 0.56 per cent to AU$33.91.

Amongst supermarkets, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, fell 0.72 per cent to AU$41.30, Woolworths Limited (ASX:WOW) was down 0.82 per cent to AU$27.85, Metcash Limited (ASX:MTS) slipped 0.94 per cent to AU$1.05 and Myer Holdings Ltd (ASX:MYR) declined 1.25 per cent to AU$1.18. However, Caltex Australia Limited (ASX:CTX) gained 0.38 per cent to AU$33.93.

Economic news, currency and market outlook

Falling commodity prices are exerting fierce cost pressures on mining companies, and these are being reflected in massive job cuts. Anglo American plc (LON:AAL) said Friday it would cut 53,000 jobs over the next several years, or almost 35 per cent of its current workforce of 151,000, while South African miner Lonmin Plc (LON:LMI) said it would cut 6,000 workers over the next two years, according to Dow Jones. Yancoal Australia Ltd (ASX:YAL) said it would cut up to 225 staff from its Hunter Valley mines in NSW due to the downturn in the global coal market.

Ratings agency Standard and Poor’s warned Friday that continuing damage to commodity prices, political logjams or mounting budgetary deficits could result in Australia losing its AAA credit rating.

Chinese manufacturing contracted at the fastest pace in 15 months according to the flash Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI), which fell to 48.2, the lowest level since April last year. This was the fifth straight month of decline in the index, and the data pushed the Australian dollar down to a six-year low below 73 US cents, reported ABC.

On Wall Street, stocks suffered their largest weekly fall since March on Friday led by stocks in the energy and materials sector which succumbed to weaker than expected manufacturing data from China. The Dow Jones Industrial Average fell 163.39 points, or 0.92 per cent, to 17,568.53, the S&P 500 lost 22.5 points, or 1.07 per cent, to 2,079.65 and the Nasdaq Composite dropped 57.78 points, or 1.12 per cent, to 5,088.63.

The Australian dollar continued its downward trajectory due to poor manufacturing data from China and weak international sentiment according to the Business Spectator. At 06:30 this morning (AEST) the local currency was trading at 72.70 US cents, down from 73.02 US cents on Friday.

The Australian stock market is likely to open lower today given that at 06:45 am (AEST) this morning, the September ASX SPI200 Index (AP) Futures was down 49 points at 5,467.