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March 2014
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The benchmark S&P/ASX 200 Index lost 20.5 points, or 0.4 per cent, on Monday to 5384.3, after earlier shedding as much as 1.2 per cent. The mining sector led the losses amid fears of weaker demand from China and falling iron ore and coal prices.
"Recent events in Ukraine are a poignant reminder of the risks associated with emerging markets as an asset class," Bell Asset Management chief investment officer Ned Bell said.
More worryingly for local investors is the risk of emerging-market volatility triggering a more general bout of profit-taking globally, he said. "Given the extended valuations in Australia and many developed global markets, all equity investors are susceptible to a minor correction. "RBA expected to hold rates
But in New Zealand on Monday, the benchmark NZX 50 Index defied the global gloom, adding 0.4 per cent to close above 5000 points for the first time at a record 5007.4.
Domestically, a slew of local economic indicators provided mixed signals, but the Reserve Bank of Australia is widely expected to keep the official interest rate at its current record-low 2.5 per cent when it meets on Tuesday.
A monthly TD-Melbourne Institute inflation gauge rose 0.2 per cent in February, lifting the annual pace of price growth to 2.7 per cent, which is on the high side of the 2 per cent to 3 per cent range being targeted by the RBA.
A Housing Industry Association survey showed sales of new houses and apartments rose 0.5 per cent in January to be 17 per cent higher than a year earlier. Meanwhile, an RP Data-Rismark index showed that average Australian capital city house prices declined 0.9 per cent in February – house prices are up 9.5 per cent year-on-year. China growth worries
The big four banks all closed lower. Commonwealth Bank of Australia lost 0.2 per cent to $74.48, while Westpac Banking Corporation fell 0.5 per cent to $33.31. ANZ Banking Group and National Australia Bank dipped 0.6 per cent to $31.95 and $34.55 respectively.
The biggest miners led the falls after figures from China's National Bureau of Statistics, released over the weekend, showed growth in the manufacturing sector has been slowing for 17 months in a row. The official Chinese manufacturing purchasing managers index for February dropped to 50.2.
While China's slowdown is no surprise, "it clearly doesn't help sentiment for emerging-market equities or global companies with meaningful exposures to China", Mr Bell said.
The spot price for iron ore, landed in China, fell below $US120 per tonne last week and is currently trading at $US118.10.
BHP Billiton fell 0.8 per cent to $37.40, while Rio Tinto lost 1.6 per cent to $65.79 as Citi predicted further falls in the iron ore price and downgraded shares of the two biggest miners. Oil and gold the winners
Rare earths miner Lynas Corp was the worst-performing stock, falling 4.9 per cent to 29¢.
Energy was the best-performing sector, up 1.4 per cent, as Brent crude oil spiked 1.5 per cent to $US110.72 a barrel on worries a Russian war against Ukraine could disrupt Europe's supply.
Australia's biggest oil producer, Woodside Petroleum, lifted 1 per cent to $38.32, while other big players Santos, Origin Energy and Oil Search also lifted.
Nomura's UK-based asset allocation strategists Kevin Gaynor and Muhammad Kirdar noted that, given the unrest in Ukraine, it was sensible investors were seeking protection in "risk-off" markets such as long gold, long energy commodities and long call options on the US dollar.
Junior goldminers dominated the list of top-performing stocks, and Australia's biggest gold producer, Newcrest Mining, added 5.7 per cent to $11.99 after the precious metal's spot price jumped 1.2 per cent to $US1342.93 per ounce.
Philippines-focused gold producer Medusa Mining was the best-performing stock in the ASX 200, climbing 13.4 per cent to $2.46, as analysts reviewed interim financial results released last week that confirmed falling revenue, profits and earnings but showed the company still had a strong balance sheet. Deutsche Bank and Goldman Sachs analysts both upgraded the stock, while Macquarie Group issued a downgrade.
The biggest food and liquor sellers were both lower. Woolworths fell 1 per cent to $35.70, while Wesfarmers, owner of Coles, lost 0.5 per cent to $42.75. Telstra Corporation bucked the trend, up 0.4 per cent at $5.07. Equity markets around Europe and in the United States are tipped to fall on Monday night in response to the risk of the escalation in geopolitical tensions threatening global market stability after Russia's Parliament provided further backing to President Vladimir Putin's push into Ukraine.
The benchmark S&P/ASX 200 Index lost 20.5 points, or 0.4 per cent, on Monday to 5384.3, after earlier shedding as much as 1.2 per cent. The mining sector led the losses amid fears of weaker demand from China and falling iron ore and coal prices.
"Recent events in Ukraine are a poignant reminder of the risks associated with emerging markets as an asset class," Bell Asset Management chief investment officer Ned Bell said.
More worryingly for local investors is the risk of emerging-market volatility triggering a more general bout of profit-taking globally, he said. "Given the extended valuations in Australia and many developed global markets, all equity investors are susceptible to a minor correction. "RBA expected to hold rates
But in New Zealand on Monday, the benchmark NZX 50 Index defied the global gloom, adding 0.4 per cent to close above 5000 points for the first time at a record 5007.4.
Domestically, a slew of local economic indicators provided mixed signals, but the Reserve Bank of Australia is widely expected to keep the official interest rate at its current record-low 2.5 per cent when it meets on Tuesday.
A monthly TD-Melbourne Institute inflation gauge rose 0.2 per cent in February, lifting the annual pace of price growth to 2.7 per cent, which is on the high side of the 2 per cent to 3 per cent range being targeted by the RBA.
A Housing Industry Association survey showed sales of new houses and apartments rose 0.5 per cent in January to be 17 per cent higher than a year earlier. Meanwhile, an RP Data-Rismark index showed that average Australian capital city house prices declined 0.9 per cent in February – house prices are up 9.5 per cent year-on-year. China growth worries
The big four banks all closed lower. Commonwealth Bank of Australia lost 0.2 per cent to $74.48, while Westpac Banking Corporation fell 0.5 per cent to $33.31. ANZ Banking Group and National Australia Bank dipped 0.6 per cent to $31.95 and $34.55 respectively.
The biggest miners led the falls after figures from China's National Bureau of Statistics, released over the weekend, showed growth in the manufacturing sector has been slowing for 17 months in a row. The official Chinese manufacturing purchasing managers index for February dropped to 50.2.
While China's slowdown is no surprise, "it clearly doesn't help sentiment for emerging-market equities or global companies with meaningful exposures to China", Mr Bell said.
The spot price for iron ore, landed in China, fell below $US120 per tonne last week and is currently trading at $US118.10.
BHP Billiton fell 0.8 per cent to $37.40, while Rio Tinto lost 1.6 per cent to $65.79 as Citi predicted further falls in the iron ore price and downgraded shares of the two biggest miners. Oil and gold the winners
Rare earths miner Lynas Corp was the worst-performing stock, falling 4.9 per cent to 29¢.
Energy was the best-performing sector, up 1.4 per cent, as Brent crude oil spiked 1.5 per cent to $US110.72 a barrel on worries a Russian war against Ukraine could disrupt Europe's supply.
Australia's biggest oil producer, Woodside Petroleum, lifted 1 per cent to $38.32, while other big players Santos, Origin Energy and Oil Search also lifted.
Nomura's UK-based asset allocation strategists Kevin Gaynor and Muhammad Kirdar noted that, given the unrest in Ukraine, it was sensible investors were seeking protection in "risk-off" markets such as long gold, long energy commodities and long call options on the US dollar.
Junior goldminers dominated the list of top-performing stocks, and Australia's biggest gold producer, Newcrest Mining, added 5.7 per cent to $11.99 after the precious metal's spot price jumped 1.2 per cent to $US1342.93 per ounce.
Philippines-focused gold producer Medusa Mining was the best-performing stock in the ASX 200, climbing 13.4 per cent to $2.46, as analysts reviewed interim financial results released last week that confirmed falling revenue, profits and earnings but showed the company still had a strong balance sheet. Deutsche Bank and Goldman Sachs analysts both upgraded the stock, while Macquarie Group issued a downgrade.
The biggest food and liquor sellers were both lower. Woolworths fell 1 per cent to $35.70, while Wesfarmers, owner of Coles, lost 0.5 per cent to $42.75. Telstra Corporation bucked the trend, up 0.4 per cent at $5.07. Equity markets around Europe and in the United States are tipped to fall on Monday night in response to the risk of the escalation in geopolitical tensions threatening global market stability after Russia's Parliament provided further backing to President Vladimir Putin's push into Ukraine.
