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Shares post largest fall in nine months

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AAP

2013-02-21

About $36 billion was wiped from the value of Australian shares on Thursday after the local market posted its largest one-day decline in nine months.

The fall, generated by investor concerns over a big drop on Wall Street overnight and weaker metals prices, took the local market below the 5,000 point barrier that it broke through on February 13.

The benchmark S&P/ASX200 index tumbled 118.6 points, or 2.33 per cent, to 4,980.1 points on Thursday, while the broader All Ordinaries index slid 115.8 points, or 2.26 per cent, to 4,998.6 points.

Both indices posted their largest daily fall since May 18, 2012.

On the ASX 24, the March share price index futures contract fell 106 points to 4,967 points, on volume of 48,686 contracts.

The majority of the decline came in afternoon trade, with the market down a little under one per cent at noon.

Every sector went backwards, with energy stocks the heaviest hit after tumbling 4.55 per cent, according to IRESS data.

Materials stocks and financials - the two largest components of the Australian market - dropped 3.44 per cent and 2.38 per cent, respectively.

Investors headed for the exits - both in Australia and in overnight New York trading - after the minutes of the US Federal Open Market Committee (FOMC) revealed the US central bank was split over its asset purchase programs.

"The FOMC minutes revealed the Fed is currently sitting in uncharted territory without a clear map to guide them home," CMC Markets sales trader Ben Taylor said in a research note.

"Disagreement over the current path is causing concern for a market that demands certainty.

"This indecision has placed pressure on metal markets today and especially the gold market, which had already suffered huge selling pressure from investors seeking riskier returns.

"Flagging tensions in Iran has also given traders reason to sell off oil contracts, which has also taken a hammering following the FOMC minutes."

BHP Billiton lost $1.48, or 3.83 per cent, to $37.17, Rio Tinto slipped $2.09, or 3.01 per cent, to $67.30 and Fortescue Metals dipped 12 cents, or 2.44 per cent, to $4.80.

The spot price of gold in Sydney finished at $US1,581.45 per fine ounce, down $US25.92 from Wednesday's closing price of $US1,607.37.

The big banks all fell more than two per cent - ANZ eased 76 cents to $27.98, Commonwealth Bank dropped $2.04 to $64.81, National Australia Bank finished down $1.14 at $29.42 and Westpac ended 86 cents lower at $29.49.

A rare positive was Qantas, which gained 4.5 cents, or 2.79 per cent, to $1.66 after posting first half net profit of $111 million, more than double the $42 million in the prior corresponding period.

National turnover was 2.05 billion securities worth $7.43 billion, with 264 stocks up, 803 down and 331 steady.

Jordan Chong