(RTTNews) - The Australian stock market fell more than 4% on Tuesday, extending Monday’s 1.6% losses, as investors shrugged off the fourth rate cut by the Reserve Bank of Austrakia in as many months and focused on the deteriorating global economic outlook. The benchmark S&P/ASX 200 index fell 153 points to 3,528.2 and the broader All Ordinaries index closed down 145.6 points or 4.0% at 3,473.4.

The losses on the Australian market were in line with the major exchanges in Asia, but not as severe as in the U.S. and Europe, as the Reserve Bank’s full percentage point cut and better-than-expected retail sales provided some degree of support.

In the currency market, the Australian dollar responded positively to the central bank’s decision, rising to US$0.6406 from US$0.6376 immediately before the announcemnet. The Aussie closed at US0.6465 on Monday.

Wall Street plunged Monday on news that the U.S. has been in a recession since December 2007 and after data showed that U.S. factory activity fell to its weakest since 1982. Federal Reserve Chairman Ben Bernanke’s comments that the U.S. economy remained under considerable strain also added to the negative investor sentiment. The Dow plunged 680.0 points or 7.7% to 8,149.1, the Nasdaq slumped 137.5 points or 9.0% to 1,398.1 and the S&P 500 tumbled 80.0 points or 8.9% to 816.2.

Crude oil fell to its lowest level in more than three years on Tuesday in Asia on signs that the U.S. economy is in a more severe economic slowdown than expected. At 1:08 a.m. ET, oil was quoted at $47.81 a barrel, down $1.47 after the contract for January delivery plunged 9% or $5.15 to settle at $49.28 a barrel on the New York Mercantile Exchange.

In economic news, the Reserve Bank of Australia reduced its key interest rate by 100 basis points to 4.25%. The Australian Bureau of Statistics reported that overall retail sales increased a seasonally adjusted 0.7% in October, following a revised contraction of 1.0% in September. The bureau also reported a seasonally adjusted current account deficit of A$9.736 billion in the third quarter, compared to a revised deficit of A$14.043 billion in the second.

Miners and energy stocks were hit the hardest after China, a major consumer of raw materials, announced that its manufacturing activity fell to a record low last month and President Hu Jintao warned that the global economic crisis could shake the Communist Party’s grip on power. BHP Billiton plunged 9.6% and Rio Tinto plummeted 8.7%, while Fortescue Metals closed unchanged. Oil and gas producer Woodside Petroleum tumbled 10.5% and Santos lost 2.7% after crude oil plunged prices slumped overnight. Gold miners were mixed after gold prices fell in Sydney. Lihir Gold rose 0.9%, but Newcrest Mining fell 0.3%.

The major banks fell after the RBA reduced the cost of borrowing to the lowest level in seven years. Commonwealth Bank plunged 5.3%, National Australia Bank lost 3.6%, Westpac plummeted 5.0% and ANZ gave away 3.0%. Investment bank Macquarie Group sank 13.0%. Elsewhere in the financial sector, Suncorp Metway fell 4.3%, while QBE Insurance was unchanged.

The retailers closed mixed. Woolworths declined 1.5% and Wesfarmers plunged 5.5%. Harvey Norman fell 0.9% after it reported that sales for the four weeks to November 30 rose by 0.5% from the same period last year. The outcome for written sales follows a 3.1% fall in the 28 days ended November 23. David Jones jumped 5.1%, but shopping centre operator Westfield shed 5.1%.

Among gainers, Ramsay Health Care and Platinum Asset Management advanced 1.3% each, Metcash climbed 5.2%, and Origin Energy gained 2.1%.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved

Posted in Categories: Australia, Economy, Eurozone, Releases, USA.

Subscribe by RSS Subscribe by Email