Investors waver after ratings downgrades - ABC Online

Updated February 14, 2012 17:26:58

The Australian share market has finished the day lower after ratings agency Moody's cut its assessments of several eurozone nations.

Moody's placed AAA-rated nations France, the United Kingdom and Austria on a negative outlook and cut the ratings of six nations including Spain, Italy and Portugal, reminding investors that Europe was not yet out of woods despite Greece passing tough austerity measures yesterday.

The market wavered at the open then dropped further just before lunch to flatline at the finish.

The benchmark ASX 200 index lost 1 per cent to finish at 4,243 and the All Ordinaries index gave up 0.9 per cent to end on 4,319.

CMC Markets chief market strategist Michael McCarthy said the move by Moody's showed that risks were still emanating from Europe.

"We made a 1 per cent gain yesterday on news of the bill passing the Greek parliament and, while the gains in Europe were positive, they were not as strong as 1 per cent, so it also makes sense that we are taking a little bit of that off the table ahead of the next steps required in Europe," Mr McCarthy said.

Miners and energy shares saw the largest falls, but just 16 shares on the benchmark index managed gains.

A fall in copper prices overnight saw the major miners struggle; BHP Billiton lost 1.3 per cent to $36.17 and Rio Tinto fell 1.6 per cent to $69.28.

But Fortescue Metals rose 2 per cent to $5.61 on speculation that Canadian miner Teck Resources was building a stake in Australia's third-largest iron ore producer.

Retailers also saw sharp falls on the day it was announced that bedroom furniture company Sleep City had been placed in voluntary administration.

Harvey Norman gave up 4.4 per cent to $1.98 and David Jones lost 3.6 per cent to $2.41.

The banks all posted falls; ANZ fared the best, dipping 0.4 per cent, while Westpac dropped 1.2 per cent to $20.90.

And elsewhere in the sector Australia's largest investment bank, Macquarie Group, fell 2.4 per cent to $26.78 amid reports it cut about 10 per cent of its staff in Asia last week.

But building fixtures maker GWA Group saw the worst result on the ASX 200, shedding 6.9 per cent to $2.31 after announcing a $13.3 million fall in first-half net income.

The Australian dollar also took a hit from the Moody's ratings changes. At 5:20pm (AEDT) it was buying 106.8 US cents, 83.3 Japanese yen, 81.2 euro cents, 68 British pence and $NZ1.29.

On commodity markets, Tapis crude oil has dipped to $US127.14 a barrel and West Texas Intermediate crude was buying $US100.37 a barrel.

The spot gold price has fallen to $US1,717.50 an ounce.

ABC/Reuters

Tags: business-economics-and-finance, markets, currency, stockmarket, australia

First posted February 14, 2012 17:26:58