THE share market closed in negative territory today, defying firmer commodity prices and a positive lead from the US overnight.
Wall Street chalked up gains due to widespread expectations that interest rates will be cut for the second time in a two weeks when the board of the US Federal Reserve meets tomorrow night (Australian time).
Locally, the benchmark S&P/ASX200 index finished down 143.8 points, or 2.45 per cent, to 5716.5 and the All Ordinaries had fallen 131.8 points, or 2.24 per cent, to 5754.5.
On the Sydney Futures Exchange at 4.19PM (AEDT), the March share price index contract was down 121 points to 5692 on 34,063 contracts.
MF Global senior trader Anthony Anderson said trading volumes were thin as fears for the US economy continued.
"The futures were indicating the local market would have a good opening, up 50 points or so, and within half an hour it was down 50 points,” Mr Anderson said.
"It’s hard to say what the cause of the weakness is other than nervousness about the US.
"Asia was very weak yesterday but it’s better today.
"The banks were particularly weak, as were resources despite stronger commodity prices overnight.
"Things should be looking better than they are, but it emphasises the nervousness around and strong selling pressure.
"It does seem a little bit overdone.”
He said an expected 50-basis points interest rate cut in the US on Wednesday had already been factored into the market.
Excluding aluminium, base metal prices on the London Metal Exchange improved.
Regardless, the big diversified miners closed down. BHP Billiton had dipped $1.10, or 2.99 per cent, to $35.70 and takeover target Rio Tinto had shed $4.93, or 4.16 per cent, to $113.57.
The big banks were weaker. ANZ Bank was down $1.04 to $26.45, Commonwealth Bank was $2.00 softer at $51.71, National Australia Bank was $1.06 lower at $35.43 and Westpac had dropped 34 cents at $26.25.
The nation’s fifth largest bank, St George, dropped $1.02 to $29.98.
Despite oil prices rising to $US91.04 a barrel, energy stocks fell. Woodside Petroleum lost $1.34 to $45.85 and Santos dipped 63 cents to $12.18.
Papua New Guinea’s largest oil and gas producer Oil Search reported a 3 per cent fall in fourth quarter production, due to natural field decline in PNG and a lower contribution from its interests in Egypt. Oil Search shares finished down 35 cents to $4.35.
Chinese Iron and Steel Group took a 3.9 per cent stake in Apollo Minerals and is looking to increase its interest to 19.9 per cent. Apollo’s shares finished four cents higher at 33 cents.
Resource investment house Mineral Securities (MinSec) gave the thumbs up to a merger proposal with copper producer CopperCo to create an diversified base and precious metals company with a market value of $530 million.
Shares in MinSec were steady at $1.40 while CopperCo’s shares were down two cents to 63 cents.
Read the rest of this entry »