Australian stocks slump 2.4% over the week
Australian shares slipped 2.4% over the week, extending losses from the previous two weeks as the ongoing decline in commodity prices continues to hurt energy and mining companies.
The S&P/ASX 200 index lost 122.1 points over five days to close at 5,029.5 on Friday, with all 10 sectors suffering losses.
“We have only seen two ‘up’ days in the last two weeks so there is a large amount of negative sentiment around for investors since the end of November,” said CommSec senior investment adviser Blair Hannon.
“The continued fall in commodity prices – specifically, iron ore and oil – has seen companies exposed to these commodities hit hard. This is especially the case for BHP, which has large exposures in both these commodities,” he said.
Excess supply from the Organisation of the Petroleum Exporting Countries (OPEC) drove oil futures lower, according to the group’s December report released yesterday.
Brent crude traded at US$39.44 a barrel at around 4:35pm AEDT, down 8.3% from last Friday’s close, according to data compiled by Bloomberg. Meanwhile, the WTI crude slid 8.6% to US$36.53 a barrel.
US rates decision
From next week, investors will pay attention to the two-day meeting of the US Federal Reserve policymakers, where a decision on its monetary policy will be announced at 6am AEDT next Thursday.
There is a 76% probability that the Fed may raise US interest rates for the first time since 2006 at their upcoming meeting, according to data compiled by Bloomberg.
Locally, the Australian government has scheduled to release its Mid-year Economic and Fiscal Outlook for the 2015-16 financial year on 15 December.
Energy stocks plunge
The S&P/ASX 200 Energy Index sank 11% this week, sitting at the bottom of the ASX 200 ladder, with all 13 index members declining.
Shares in Whitehaven Coal lost 25%, the worst performing energy stock, while Santos shed 17%.
Oil Search tumbled 22%, and Woodside Petroleum slipped 7%. In addition to lower oil prices, shares in Oil Search were also hit by news that Woodside formally withdrew its takeover offer for the company.
The S&P/ASX 200 Materials Index dropped 2.7% over five days, led by South32, which declined 13%.
BHP Billiton lost 4.1%, while Rio Tinto fell 3%, as iron ore spot price slid to the US$37-per-tonne level.
Austal was the biggest loser on the ASX 200, plummeting 32% to $1.62.
The manufacturer of defence and commercial ships said on Thursday that earnings from its US shipyard for the 2016 financial year are expected to be lower than the previous year on margin pressure.
Meanwhile, Broadspectrum surged 46% this week, the steepest increase in the ASX 200, after the company received an all-cash takeover offer from Spain’s Ferrovial.