News & Opinions Home
Market Place
Reuters Australia
Australia stocks end at 4-wk low on economy doubts
Tuesday June 23, 07:06 PM
(Adds analyst comment)
SYDNEY, June 23 (Reuters) - Australian shares shed 3.1 percent to finish at a near four-week low on Tuesday as investors turned doubtful about the strength of a world economic recovery, selling mining stocks such as BHP Billiton Ltd (ASX: BHP.ax) .
Some analysts said the drop, the largest daily decline since May 14, came in thin trading volumes and did not necessarily mean more selling lay ahead.
"People are getting worried that they are not seeing more good economic news," said Ben Potter, a research analyst at IG Markets. "But volumes are low and stocks are falling under their own weight."
The S&P/ASX 200 index .AXJO dropped 121.3 points to 3,796.9, based on the latest available data, more than erasing gains of the past two sessions.
New Zealand's benchmark NZX 50 index .NZ50 fell 1.2 percent or 32.9 points to 2,762.
Trading volume for the index was 1.05 billion, below last week's daily average of 1.46 billion, Reuters data showed.
Some investors have turned sceptical in the past week that the recent improvement in economic data signalled a recovery, arguing instead that it only indicates an abating crisis.
The concerns were underscored on Tuesday by comments from a China central bank official who said the economy, the world's third-largest, was moving in the right direction but not yet on a solid footing. [ID:nPEK123536]
Economic woes hit oil and metal prices, in turn dragging on mining stocks. BHP Billiton fell 4.1 percent to A$33.80 and Rio Tinto (ASX: RIO.ax) dropped 2.8 percent to A$48.61.
Gold miners also fell across the board as spot gold prices XAU= hit a six-week low. Newcrest Mining (ASX: NCM.ax) , Australia's leading gold miner, shed 3.9 percent to A$29.99 and Lihir Gold LGL.AX lost 3.1 percent to A$2.84.
Bank stocks got hammered too as investors worried about rising bad loans.
Macquarie cut its investment rating on two local banks, Commonwealth Bank (ASX: CBA.ax) and Westpac (ASX: WBC.ax) , to underperform from outperform, saying Australian bank stocks looked fully valued given their gloomy outlook.
The investment bank cited weak domestic investment, rising interest rates and unemployment as among the reasons that would weigh down on the sector.
"Considering today's full valuations, prospects for major bank stocks are limited," Macquarie said.
But Reuters data showed Australian bank stocks still look cheaper compared to their Asian peers.
Australian bank stocks trade at an average 11.1 times their 2009 earnings, far cheaper than Japan's largest bank Mitsubishi UFJ Financial's 8306.T 26 times, and Singapore's DBS Group's DBSM.SI 16.7 times.
Commonwealth, Australia's third-largest bank, lost 3.8 percent to A$37.22.
Top bank National Australia Bank (ASX: NAB.ax) slid 3.6 percent to A$21.69. Westpac (ASX: WBC.ax) , Australia's No. 2 bank by assets, dropped 4.5 percent to A$19.22 and Australia and New Zealand Banking Group (ASX: ANZ.ax) , the No. 4 bank, fell 3.3 percent to A$16.03.
Australia's biggest investment bank, Macquarie Group MQG.AX, tumbled 5.5 percent to A$35.76. (Reporting by Koh Gui Qing)
| More Quotes and Company Information: |
Next Article: Aussie dollar wedged in tight range; rebounds vs yen
Previous article: Aussie dollar on defensive as global mood sours
Top Headlines
Financial markets
Thursday June 25, 06:10 AM - Newstalk ZB
On the markets, the NZX50 is down 22 points to 2,740. .. Read More
IRD records $4 billion in tax debt
Thursday June 25, 06:00 AM - Newstalk ZB
A report by the Auditor-General into the Inland Revenue Department's management of tax debt paints a less than pretty picture .. Read More
Lee Kuan Yew Water Prize 2009 Winner Calls on Minister Mentor
Thursday June 25, 04:07 AM - JCN Newswire
SIWW, Singapore, June 25, 2009 - (ACN Newswire ) - Professor Gatze Lettinga from The Netherlands, the recipient of this year' .. Read More
Calculators
Copyright © 2009 Yahoo! All rights reserved.
Yahoo!Xtra: A Yahoo!7/Telecom New Zealand Company.