Australian market closes lower, led by miners

(RTTNews) - The Australian stock market closed lower on Wednesday, ending a two-day winning streak. Investors locked in profits after the key index posted steep gains in the previous two trading sessions. Wall Street’s decline overnight and weaker commodity prices also impacted investor sentiment. The benchmark S&P/ASX 200 index closed down 35.2 points, or 0.8%, at 4,300.0 and the broader All Ordinaries index fell 39 points, or 0.9%, to 4,272.5. On the Sydney Futures Exchange, the December share price index futures contract was down 42 points at 4,362.

In the currency market, the Australian dollar closed weaker as investors shied away from riskier assets following Wall Street’s decline overnight. The local unit also lost ground after a non-voting member of the U.S. Fed’s monetary policy committee questioned the need for more U.S. interest rate cuts. The Aussie finished the local session at US$0.7005-0.7009, down one U.S. cent from Tuesday’s close of US$0.7106-0.7111.

On Tuesday, U.S. stocks ended lower amid lingering concerns that the government measures won’t be enough to prevent the economy from entering a deep recession. The Dow Jones industrial average lost 0.82% following Monday’s 11.91% surge and the tech-dominated Nasdaq composite index fell 3.54%.

Oil prices continued to decline in Asia on Wednesday amid uncertainty over the future of the global economy. At 2:23 a.m. ET, oil was quoted at US$78.49 a barrel, down 14 cents. The contract for November delivery fell $2.56 to $78.63 a barrel on the New York Mercantile Exchange on Tuesday.

On the economic front, a private sector forecast of Australia’s economic activity showed an expectation of annualized growth of 2.5% in August. The Westpac Bank-Melbourne Institute leading index reading was down from expected growth of 3.3% forecast in July’s survey, and well below the long-term trend of 4.0% annualized growth. The coincident index, which measures current activity, increased 0.4% on month in August to 2.0%, also below the long-term trend of 3.7% on-year growth.

In the resources sector, Rio Tinto plunged 5.2%. The miner said that the long-term outlook for the company was positive despite the turmoil on financial markets. Rio’s global iron ore production rose by 17% during the three months to September 30 compared to the same period in 2007. Index leader BHP Billiton plummeted 4.2%.

Iluka Resources gained 4.6% after the company upgraded its profit outlook following a fall in the Aussie and a rise in commodity prices.

The energy sector was mixed after oil prices continued to decline Wednesday in Asia. Woodside Petroleum fell 3.1% and Santos tumbled 4.4%, while Oil Search jumped 4.2%. Gold miners lost ground on weaker gold prices in Sydney. Newcrest Mining slumped 6.2%, Newmont Mining fell 3.4%, and Lihir Gold lost 1.3%.

Among the major banks, National Australia Bank dropped 1.3%, Commonwealth Bank declined 1.8%, and Australia and New Zealand Banking Group slipped 0.3%. Westpac Banking Corp declined 0.2%, but its takeover target St George Bank rose 1.4%. Australia’s largest investment bank Macquarie Group fell 2.2%.

Power supplier Origin Energy rose 1.6% after the company said that it expects an increase of up to 40% in underlying earnings in this financial year, boosted by its joint venture with ConocoPhillips.

In the retail sector, Woolworths advanced 0.4% and Coles owner Wesfarmers gained 1.5%, while David Jones plunged 3.1%.

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Posted in Categories: Australia, Economy, New Zealand, Releases, USA.