ASX CLOSE: Market finishes lower; financials mixed

Tuesday 22nd September 2009

Trading was mixed across Asia today as Japan remained on holiday and broker upgrades for Samsung and automotive components manufacturers sparked some buying interest. In China, the Shanghai Composite is still trading, down 0.7% while the Hang Seng is currently 0.5% higher. The Kospi finished 1.4% higher.

Globally, we're seeing a slight shift in sentiment. Gone are the days when markets were merely rising on ‘less bad' news. Investors are demanding more and wanting concrete evidence companies can grow top line earnings rather than simply cutting costs.

Also, valuation concerns are beginning to creep into the market. They certainly look stretched in the short-term but on a three-to-five year basis, the market remains reasonably priced assuming we continue to see earnings recover.

The weakness seen over the last few sessions has been very US dollar centric. The dollar has bounced, causing equities and commodities to retreat. The key for markets will be what happens when the dollar resumes its slide. This will give us a better idea where current market sentiment is.

There was talk yesterday at how little action there was in the market. Today was certainly no different with the benchmark index oscillating a few points either side of the flat line. There's no interest from either side of the market.

With end-of-year targets becoming more bullish by the day (UBS are now talking 5300), institutions seem hesitant in being the first to chase the market higher.

In Australia, the ASX 200 finished down 0.3% at 4663.7, slightly above the lows of 4656. Both the materials and financials recovered from morning weakness, only to dip again in late trade. A GDP upgrade from Australia's chief commodities forecaster, ABARE helped the market claw back gains during the middle part of the session.

The property trust and energy sectors were the biggest percentage decliners, down 1.6% and 1.4% respectively. Among property trusts, the likes of Macquarie Countrywide (-5.7%), Goodman Group (-4.7%), Stockland (-4.1%) and GPT Group (-3%) were the worst performers.

The energy stocks were weaker after Crude Oil futures lost 3.6% overnight, its third straight fall as a stronger US dollar weighed on commodities and as concerns about the ongoing demand for oil lingered. Origin Energy, Paladin Energy, Woodside Petroleum and Oil Search were the top four decliners, all down between 1.3% and 1.6%, with Origin the biggest decliner.

After broadly weaker overnight leads, the materials stocks struggled all day. On the London Metals Exchange, Nickel fell 2.4%, Aluminium 2.6%, Zinc 2.5% and Copper 3.3%. Both Rio Tinto and BHP Billiton were lower in London, down 3.4% and 2.7%, respectively.

Locally, Bluescope Steel (-2.3%), Amcor (-1.5%), Orica (-1.4%), Rio Tinto (-0.5%) and BHP Billiton (-0.2%) detracted the most points from the index.

The financials sector ended the session mixed, making the best of poor US leads. Macquarie Group and QBE Insurance Group were the top two gainers, both up 0.8% respectively. Of the major banks, both ANZ and Westpac Banking Corporation finished in the black, rising 0.8% and 0.3% while Commonwealth Bank of Australia and National Australia Bank lost 0.1% and 0.2%.

Prices are in AUD unless otherwise stated.
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