Australian stocks plunge 5.8% over the week
Australian shares nosedived 5.8% over the week, benchmark stock index again falling to below the 5,000-point level, as the collapse of Chinese stock markets dragged global equities down.
The S&P/ASX 200 index finished the week at 4,990.8, down 305.1 points from 5,295.9 on the last trading day of 2015. Friday’s trading close was also the lowest in more than three weeks since 15 December 2015.
“2016 has started with heightened concerns over the Chinese growth story leading to steep declines in global equities,” said CommBank economist Diana Mousina.
“Plunging Chinese equities triggered circuit-breakers following a 7% decline in the CSI 300 Index. The circuit-breaker rule has now been suspended because it was actually accentuating equity market declines and lifting investor nerves,” she said.
Mousina said the People’s Bank of China’s moves to cut the yuan’s reference rate for the eighth straight day added volatility to financial markets this week.
“While a weaker yuan is a positive for Chinese growth, the unexpected steep weakening in the currency has added to investor unease in the market,” she said.
The WTI crude traded at US$33.89 per barrel at 4:35pm AEDT, the lowest level since 2004, and an 8.5% decline from the end-2015 close, according to data compiled by Bloomberg. Brent crude dropped 7.9% over the week to US$34.35 a barrel.
Responding to the stock market routs, the Australian dollar weakened 3.2% this week to 70.52 US cents at 4:37pm AEDT.
Financial stocks battered
All 10 sectors within the ASX 200 were in the red, with financials and materials the two worst-performing sectors.
The S&P/ASX 200 Financials Index, which accounted for almost half of the ASX 200’s weighting, sank 6.7% over five days.
Shares in Commonwealth Bank of Australia, the nation’s largest banking group, lost 7.1%, while Westpac slid 7.6%. ANZ and NAB wiped off 8.6% and 8.2%, respectively.
Meanwhile, the S&P/ASX 200 Materials Index gave up 6.6%, with all index members except three gold mining companies suffering losses.
Shares in BHP Billiton plunged 8.5%, while South32 slipped 11.7%. Alumina was the worst-performing material stock, having plummeted 12.1% this week.
The gold spot price advanced 4% this week to US$1,103.20 per ounce at 4:38pm AEDT, according to Bloomberg data.
The rally propelled the share prices of gold miners, namely Newcrest Mining, Regis Resources and Evolution Mining. All three stocks made the top 10 list of best ASX 200 performers this week.
Newcrest Mining, Australia’s biggest gold miner, gained 3.2% over the week, while Regis Resources increased 0.9%. Evolution Mining, which is close to completing the acquisition of Phoenix Gold, added 0.7%.