Australian market falls to lowest level since November

Derek Rose |

The local share market has endured another day of sharp losses, sinking to a 19-week low as Swiss authorities tried to stem global fears about the stability of banks by brokering a hasty merger of USB and Credit Suisse.

The S&P/ASX200 on Monday had been down fewer than 20 points at midday but its losses accelerated in the afternoon, with the benchmark index finishing down 96.3 points, or 1.38 per cent, at 6,898.5.

The broader All Ordinaries fell 103.1 points, or 1.43 per cent, at 7,085.1.

It’s the fourth fall of more than one per cent in the past seven sessions, leaving the ASX200 down two per cent for the year and at its lowest level since November 4.

The losses came as a weekend of emergency talks in Europe concluded with UBS buying its troubled rival Credit Suisse in a 3 billion Swiss franc ($A4.5 billion) acquisition – half the value the mega-bank was trading for on Friday.

Switzerland’s central bank, the government and regulators brokered the deal in a bid to stem financial contagion, even agreeing to change the law to allow it to go ahead without a shareholder vote.

“The crisis in the banking sector has definitely been leading to a risk-off sentiment and a broad-based decline,” IG market analyst Hebe Chen told AAP.

“It’s a crisis of confidence, causing investors to wonder what will be next? Is this the end of the crisis, or just the start of it?”

There’s also more uncertainty heading into this week’s Federal Reserve meeting than for any meeting in half a year, Ms Chen said. The outcome will be announced early on Thursday, Australia time. 

Every ASX sector except telecommunications finished lower on Monday, with energy the worst loser, dropping three per cent as Brent crude fell to a 16-month low of $US72 a barrel.

Woodside dropped 2.9 per cent to $31, Santos fell 2.7 per cent to $6.74 and Whitehaven Coal retreated 4.6 per cent to $6.37.

The financial sector was down 1.7 per cent, with more losses for all the Big Four banks.

NAB dropped 1.5 per cent to $27.86, ANZ subtracted 1.4 per cent to $22.49, Westpac retreated 0.6 per cent to $21.12 and CBA dipped 0.4 per cent to $96.08. 

Also, Macquarie fell 4.6 per cent to a three-month low of $167.78.

Insurance companies fared even worse as expectations fell for rate hikes, meaning they stand to earn less from their bond portfolios. Suncorp, QBE and IAG were all down around four-and-a-half per cent.

In the heavyweight mining sector, goldminers were shining while lithium miners suffered.

Evolution jumped 10.1 per cent, Northern Star added 8.5 per cent and Newcrest rose 6.0 per cent as the price of the yellow metal closed in on $US2,000 an ounce amid the uncertainty.

But lithium producer Pilbara dipped 5.2 per cent and Allkem fell 4.2 per cent.

Among the big three iron ore giants, BHP dropped one per cent to $42.96, Fortescue Metals retreated 2.9 per cent to $20.80 and Rio Tinto dipped 0.7 per cent to $113.99.

Elsewhere, owner REA Group gained 1.8 per cent to $131.20 and Domain added 0.6 per cent to $3.24, with investors apparently betting that a shorter rate hike cycle could help the property market.

The market’s expectations for a rate hike next month has essentially dipped to zero and has even priced in a small chance of a rate cut, according to the ASX’s RBA Rate Tracker.

There was also some merger and acquisition news on Monday.

Healius gained 8.3 per cent to $3.01 and ACL added 2.2 per cent to $3.68 after ACL lobbed an unsolicited, all-scrip takeover offer at its larger rival.

The deal would combine the No.3 and No.2 players in Australia’s pathology market, unseating Sonic as the largest domestic provider.

The Australian dollar was buying 66.74 US cents, from 66.39 US cents at Friday’s ASX close.

Cryptocurrencies continued their hot streak, with Bitcoin trading for over $A40,000 for the first time since last June. The original crypto was up two per cent to over $41,000 on Australian exchanges.


* The benchmark S&P/ASX200 index finished Monday down 96.3 points, or 1.38 per cent, at 6,898.5.

* The broader All Ordinaries 103.1 points, or 1.43 per cent, to 7,085.1.


One Australian dollar buys:

* 66.74 US cents, from 66.39 US cents at Friday’s ASX close

* 87.68 Japanese yen, from 89.22 Japanese yen

* 62.61 Euro cents, from 62.99 Euro cents

* 54.83 British pence, from 55.18 pence

* 106.83 NZ cents, from 107.50 NZ cents