Market has come back to earth after record highs – Wednesday 31 July

Derek Rose
(Australian Associated Press)


The Australian share market has pulled back from its record highs despite gains for the energy sector.

The benchmark S&P/ASX200 index finished down 32.5 points, or 0.47 per cent, to 6,812.6 points on Wednesday, while the broader All Ordinaries closed down 31.6 points, or 0.46 per cent, to 6,896.7.

“Today the market has come back to earth after yesterday’s record highs,” said CommSec market analyst James Tao, referring to the ASX200 on Tuesday eclipsing its all-time high set in 2007.

Markets were also lower in the US and Europe, and investors were distracted ahead of a US decision on interest rates and US-China trade talks underway in Shanghai.

“There has been a little bit of action on the domestic front as well,” Mr Tao observed.

Government figures announced on Wednesday showed that lending to businesses fell in June, while inflation for June narrowly beat expectations but economists said it was probably not enough to ward off a third rate cut by the end of the year.

Adelaide Brighton shares plunged 18.1 per cent to $3.54 after Australia’s biggest cement maker said it expected profit for the year ending December 31 to be in the range of $120 million to $130 million – about $40 million less than previously expected.

The company scraped its interim dividend and said it would take a $100 million non-cash impairment, blaming “a further softening of conditions in the residential and civil construction market,” as well as competitive pressure in South Australia and Queensland.

Fellow building materials companies slid as well, with Boral down eight per cent, CSR down 6.3 per cent and Fletcher Building down 3.1 per cent.

CYBG fell 13.4 per cent to $3.10 after the Clydesdale Bank owner said its mortgage book shrank during the third quarter.

But Genworth Mortgage gained 14.9 per cent to $3.39 after declaring it would return some of its $88.1 million in first-half profit to shareholders through a special dividend.

The big banks were all lower, with Westpac down 1.2 per cent to $28.65, Commonwealth down 1.3 per cent to $82.30, NAB down 0.5 per cent to $28.51 and ANZ down 0.3 per cent to $27.91.

The materials sector fell 0.3 per cent as a whole, with BHP down 0.2 per cent to $40.76 and Rio Tinto down 0.1 per cent to $98.90, but Fortescue Metals gained 1.3 per cent to $8.33 and Newcrest Mining was up 1.3 per cent to $35.58.

Champion Iron gained 10 per cent to $3.19 after reporting record iron ore production and $91.9 million in operating cash flow for the three months to June 30.

Oil companies were up after the price of crude rose 0.79 per cent to just above $US65, on expectations of a US rate cut and escalating tensions in the Persian Gulf.

Santos was up 2.1 per cent to $7.23, Paladin Energy gained 6.7 per cent to 16 cents and Origin Energy was up one per cent to $7.94 after saying it had made $943 million last financial year from its gas export joint venture in Queensland.

The Aussie dollar is buying 68.93 US cents, from 68.99 US cents on Tuesday.

Looking forward, the US Federal Reserve is widely expected to announce a 25 basis point interest rate cut at 0400 AEST on Thursday.


* The benchmark S&P/ASX200 index closed down 32.5 points, or 0.47 per cent, to 6,812.6.

* The All Ordinaries closed down 31.6 points, or 0.46 per cent, to 6,896.7.

* At 1630 AEST, the SPI200 futures index was up two points, or 0.03 per cent, at 6,754.


One Australian dollar buys:

* 68.93 US cents, from 68.99 US cents on Tuesday

* 74.81 Japanese yen, from 74.95 yen

* 61.79 euro cents, from 61.95 cents

* 56.66 British pence, from 56.79 pence

* 104.35 NZ cents, from 104.10 cents.


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