Miners burnt by market plunge

ArticleData Array ( [Article] => Array ( [article_id] => 1001243 [headline] => Miners burnt by market plunge [abstract] => The Australian sharemarket has fallen almost three per cent in just two hours of trade, as mining companies bear the brunt of falling commodity prices.
[keywords] => Share market, ASX, mining, commodities, shares, stocks, BHP, recession, prices [content] =>

The Australian sharemarket has fallen almost three per cent in just two hours of trade, as mining companies bear the brunt of falling commodity prices.

The focus this afternoon will be on the Reserve Bank of Australia (RBA), which is expected to cut interest rates again.
   
At 1217 AEDT, the benchmark S&P/ASX200 index was down 101.6 points, or 2.76 per cent, at 3,579.6, while the broader All Ordinaries fell 99.7 points, or 2.67 per cent, to 3,519.3.

On the Sydney Futures Exchange, the December share price index contract was down 89 points at 3,592 on a volume of 19,375 contracts.

Burrell Stockbroking associate Peter Wright said the local market was performing poorly on the back of a weak performance from
Wall Street.
   
"I saw that figure (the Dow) this morning and I thought - Oh, no. Here we go again," he said.
   
Mr Wright said the expected interest rate cut would do little to counter the falls on the local market.
   
"Markets do anticipate these things, and I think they've priced in 75 basis points.
   
"If we get more there will probably be a sell off as people will interpret that as though we're in a lot more trouble than what we
thought.
   
"It is probably a lose-lose situation for the market in its current mindset."
   
BHP Billiton shares fell $1.92, or 6.42 per cent, to $27.98, and Rio Tinto shares lost $2.70, or 6.32 per cent, to $40.00.
   
In the US on Monday, the panel at the National Bureau of Economic Research confirmed that the economy has been in recession since December 2007.
   
US stocks finished lower, with the Dow Jones industrial average settling down 679.95 points, or 7.7 per cent, at 8,149.09 points.
   
Mr Wright said the panel had essentially redefined what constituted a recession.
   
"At the end of the day you can debate the semantics of it but the traditional metric for defining a recession has not been achieved (two consecutive quarters of GDP contraction).

"I was a bit perplexed by the markets reaction to that but that's the times we live in - any kind of negative news is just seized upon."

The banks were lower. Commonwealth Bank fell $1.02 to $31.98, National Australia Bank dropped 34 cents to $19.09, ANZ declined 24 cents to $14.14 and Westpac was down 37 cents at $16.57.

The major energy stocks also were in the red.

Australia's second biggest oil and gas producer, Woodside Petroleum, was down $2.27, or 6.27 per cent, at $33.93, Santos dropped 33 cents, or 2.29 per cent, to $14.06 and Oil Search sank 29 cents, or 6.24 per cent, to $4.36.
   
Fairfax Media fell 6.5 cents, or 4.56 per cent, to $1.36, News Corp lost 20 cents, or 1.65 per cent, to $11.90, while its non-voting scrip was down 34 cents at $11.41.

Grocery and liquor merchant Metcash has posted a 7.2 per cent fall in first half profit after recording a one-off cost related to the termination of a hedging position.

Metcash was steady at $4.00. Harvey Norman Holdings gained 10 cents to $2.25 after it reported that sales for the four weeks ended November 30 rose by 0.5 per cent, from the corresponding period last year.

Other major retailers were mixed. Woolworths lost 46 cents to $26.84, Wesfarmers fell 57 cents to $18.37, while upmarket retailer David Jones was up 13 cents at $2.70.
 

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[content] =>

European stock markets have taken another dive, more than 5 per cent, as equities succumbed to a deluge of bad economic data pointing to a severe global slowdown.

 

In London, the FTSE 100 fell 5.19 percent to 4,065.49 points, in Paris the CAC 40 lost 5.60 percent to 3,079.89 points, while in Frankfurt the DAX shed 5.88 percent to 4,394.79 points.

 

An analyst at brokerage Tullett Prebon in London said economic growth figures have outlined the worst global recession since at least the 1980s, while gauges of inflation expectation point to growing deflation fears across the G7.

 

In northern Europe, Norway's main index lost 7.78 percent, Finland's market fell 6.65 percent and Swedish equities plummeted 5.40 percent.

 

In southern Europe, the leading index on the Milan stock market, the SP/Mib, plunged 6.25 percent to 18,736 points.

 

Meanwhile Germany's DAX index lost 5.32 per cent to 4,420.99.

 

The DAX had been losing ground throughout the day and fell further after US stocks dropped sharply at the opening in New York as traders locked in gains from a stunning series of rallies in the past week as fresh recession jitters emerged.

 

Signs point to recession

 

A new set of grim figures revealed a deepening recession widening in Europe.

 

In China, manufacturing activity hit a three year low in November, showing how the crisis spread from its source in the US and Europe to powerhouse emerging markets.

 

The purchasing managers' index (PMI) dropped to 38.8 percent in November, down from 44.6 percent in October and the lowest since the government introduced the survey in 2005, said the official Xinhua news agency.

 

Meanwhile, India's exports in October tumbled for the first time in three years, hit by slumping demand in its key US and European markets.

 

Exports fell by 12 percent from the same month a year earlier to 12.8 billion dollars as demand shrank, according to government figures.

 

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The Australian stock market opened lower in early trade, after Wall Street plunged overnight amid bleak economic news.

US stocks have plummeted, after an official panel confirmed the economy has been in recession since December 2007.

The comments have sparked fresh worries amid the global financial crisis.

The Dow Jones Industrial Average sank 680.67 points (7.71 per cent) to 8,148.37 at the closing bell, which would represent the fourth-steepest point loss in history for blue chips.

The Nasdaq composite plummeted 137.50 points (8.95 per cent) to 1,398.07 and the broad-market Standard & Poor's 500 index sank 80.04 points (8.93 per cent) to a preliminary close of 816.20.

Stocks extended opening losses, after a panel of economists charged with the official designation of business cycles said the world's largest economy has been in recession since December 2007.

The Business Cycle Dating Committee of the National Bureau of Economic Research says it made the determination during a conference call on Friday.

"Economic growth figures have outlined the worst global recession since at least the 1980s while gauges of inflation expectation point to growing deflation fears across the G7," said Lena Komileva, an analyst at brokerage Tullett Prebon in London, referring to the Group of Seven rich countries.

A deluge of economic data and company reports Monday suggested economic growth was slowing in powerhouse emerging markets China and India and reinforced expectations of a deep recession in advanced economies.

In the US, a survey from the Institute of Supply Management showed a weaker-than-expected reading while separate data showed construction spending down 1.2 percent in October.

The ISM index fell 2.7 points to 36.2 percent, the weakest since May 1982.

"Manufacturing is in a tailspin and the outlook is grim," said Ryan Sweet at Economy.com.

Global stock markets had soared last week as governments rolled out measures to stimulate the global economy and fight against the credit problems in the financial sector.

But like many times since the start of the financial crisis in mid-2007, a euphoric rally has been followed by a brutal correction.

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[content] =>

The Australian stock market has fallen over three per cent in early trade, after Wall St plunged overnight on news the US is in recession.

The benchmark S&P/ASX200 dropped 123.3 points to 3,557.9 within 15 minutes of the market opening while the broader All Ordinaries was down 117.9 points at 3,501.1.

European markets were also sharply weaker, as the rally from last week came to a grinding halt after news of deeper economic woes in Germany, France and the full 15-nation eurozone and weak data from India and China.

Yesterday  the benchmark S&P/ASX 200 fell 61.3 points to 3,681.2 and the broader All
Ordinaries lost 53.7 points, or 1.5 percent, to 3,619.0.

Australian shares closed 4.3 percent higher Friday on across-the-board gains but the momentum failed to continue despite the Dow Jones Industrial Average closing last week up 102.43, or 1.17 percent, at 8,829.04 points.
 

US 'in recession' since 2007

Global markets are set to take a hammering after an economic panel has revealed the US is now another country to officially join the list of recession nations.

A private panel of US economists charged with the official designation of business cycles, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) said it had determined the world's largest economy had been in recession since December 2007.

Although a recession is generally defined as two consecutive quarters of declining activity, the panel has its own criteria for determining a downturn.

US President George W. Bush's administration acknowledged the NBER conclusion and said it has been working to foster recovery.

"The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that's where we'll continue to focus," White House spokesman Tony Fratto said.

In the US, with the auto sector teetering on the brink of collapse, the heads of the "Big Three" -- General Motors, Ford and Chrysler -- were to return to Congress this week to plead for a rescue package.

Embattled Ford said Monday it would consider selling its Sweden-based subsidiary Volvo Car.

In Japan, sales of new cars plunged 27.3 percent in November to 215,783 vehicles, the lowest since 1969, the Japan Automobile Dealers Association said.

Auto manufacturers in Europe also struggled. Sales of new cars plummeted an unadjusted 14 percent in November from a year earlier in France and 5.0 percent on a comparable number of working days.

The series of gloomy reports battered US and European stock markets.

Wall Street plunged, with the Dow Jones industrials falling 7.7 percent while the broad-market Standard & Poor's 500 index sank 8.93 percent.

A new set of grim figures pointed to a deepening recession in Europe, officials painted a grim outlook for Japan and a top auto chief warned of "massive" job losses in the auto industry.

Fresh data released on Monday showed German retail sales fell 1.6 percent in October from the previous month, while in France a closely watched index of manufacturing activity fell to 37.3 in November, its worst-ever reading.

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