australian share market ends lower on global cues 905332015

US oil settles below $48 per barrel in overnight trade

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By :  ,  Financial Analyst

The Australian share market fell in step with tumbling global equities and closed lower by 1.6 per cent on Tuesday. The S&P/ASX 200 lost 85.5 points, or 1.6 per cent, to end the session at 5,364.8, while the broader All Ordinaries index declined 83.3 points, also down 1.6 per cent to 5,346.2, on a day that marked the market’s worst performance in four weeks.

Stock markets across the globe have declined sharply following the record slump in oil prices and fresh concerns regarding the stability of the Eurozone on speculation regarding Greece’s exit. With Australia playing catch up, equities in the local market lost approximately AU$25 billion in value Tuesday, led chiefly by steep declines in energy stocks. Santos Ltd (ASX:STO) slumped 8.60 per cent to AU$7.55 while Woodside Petroleum Ltd (ASX:WPL) lost almost 5 per cent to end the day at AU$36.46. Oil Search Ltd (ASX:OSH) was another big loser, ending lower by 8.60 per cent to AU$7.31. Overall, the energy sector lost 5.75 per cent at the close, and all sectors closed in the red.

However, some analysts are veering around to the view that oil prices may have bottomed out. “The oil price likely only has small declines left from here and is set to trend higher in 2015,” Fidelity Worldwide Investment’s Sydney-based investment director Alva Devoy said, as quoted in The Sydney Morning Herald. Meanwhile, US crude for February delivery closed lower by 4.2 per cent to $47.93 on the Nymex and international benchmark Brent on ICE Futures fell 3.8 per cent to $51.10.

Saudi Arabia’s King Abdullah said oil markets are witnessing tensions caused by many factors, chiefly slow growth in the global economy. "These tensions aren't new to the oil market, and we've dealt with them in the past with a solid will, with wisdom and experience, and we will deal with the current developments in the oil markets in the same way," he said in a speech read by his crown prince on state television.

According to The Sydney Morning Herald, petrol prices in Sydney fell below AU$1 per litre for the first time in six years, with Metro Petroleum taking the initiative to drop the price of E10 to 99.9 cents at three Sydney bowsers.

Resource stocks were not so badly off, with Rio Tinto down 1.52 per cent to AU$57.59, and Fortescue Metals Group Ltd (ASX:FMG) losing 1.06 per cent to AU$2.79. However, the more oil-exposed BHP Billiton Ltd (ASX:BHP) fell 4.65 per cent to AU$28.11.

Airline shares gained. Qantas Airways Ltd (ASX:QAN) climbed 4.40 per cent to AU$2.61, a new four-year high, and Virgin Australia Holdings Ltd (ASX:VAH) was up 1.18 per cent to AU$0.430, as investors factored in better profits due to falling jet fuel prices.

The four major banks declined between 0.8 per cent and 1.2 per cent.

Macquarie Private Wealth senior investment adviser Noel Yeates sounded a bullish note according to a report in The Australian. “We have been down this road with Europe in recent years, and we have already got to the point of the ECB saying it will do ‘whatever it takes’ to preserve the Euro would,” he said. “If you look at investors who actually made good money in the past 12 months, they were actually those who took the punt (on stability) when Europe and the US were in the toilet.”

Overnight, the major indices on Wall Street all ended with losses. The Dow Jones was down 0.74 per cent to 17,371.64, the S&P 500 fell 0.89 per cent to 2,002.61 and the Nasdaq lost 1.29 per cent to 4,592.74. Australian stocks are likely to open lower, considering that the benchmark ASX SPI 200 Index (AP) March Futures contract was down by 21 points to 5,291 at 07:59 today (AEDT).

Australia’s trade deficit for November reported lower than expectations at AU$925 million. "The Australian dollar got a boost yesterday after the better than expected trade data and the rise in the Chinese Services PMI…but it was unable to sustain the momentum into the European session," said National Australia Bank senior economist Spiros Papadopoulos, as per the Business Spectator. At 09:11 A.M. today (AEDT) the Aussie was trading at 80.72 US cents.

Find up to date information on the ASX at City Index.

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