Australian shares fall 2.2% over the week
Australian shares shed 2.2% over the week as uncertainty over US interest rates and fresh oil price declines sparked market jitters and deterred buyers.
The benchmark S&P/ASX 200 index fell 114.3 points over the week to 5,042.1, a whisker above key psychological support of 5,000. On Friday, the index eased 29.6 points, or 0.6%.
“There’s a bit of uncertainty over the global growth story, the oil prices continue to bounce around, and European and US stocks continue to see significant volatility so it’s no surprise our market has had a similar showing,” said CommSec economist Savanth Sebastian.
The S&P/ASX 200 index slid briefly on Wednesday below 5,000, sparking concerns it would continue to slip.
US rate uncertainty dents confidence
Peter Warnes, head of equity research at Morningstar, said the Federal Open Market Committee’s decision to leave the key US interest rate unchanged, despite the US economy’s positive vital signs, had exacerbated uncertainty across global financial markets.
“I don’t think the Fed did anyone any favours last Thursday by not lifting [the fed funds rate],” Warnes said.
“When you get uncertainty, which the Fed elevated by not doing anything, that means central banks are nervous, which makes policy makers nervous which makes investors nervous,” he said.
Later in the week, the S&P/ASX 200 index recovered enough ground to remain above 5,000.
“Unfortunately, we’ve got to get used to this volatility. The rollercoaster ride will become the norm over the next few months,” Sebastian said.
Resources hardest hit
The resources sector posted the deepest declines over the week, falling 4.7%.
Investors pummelled sector leader BHP Billiton (ASX: BHP) 6% over the week to $22.93. Rio Tinto (ASX: RIO) was 4.3% lower at $48.95, although it advanced 1.4% on Friday.
Fortescue Metals Group (ASX: FMG) dived 12.9% over the week to $1.80, although it firmed 0.84% on Friday.
Financials were also under fire with the sector index down 3.5% over the week, including a 1% drop on Friday.
Major banks Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Bank (ASX: ANZ) and National Australia Bank (ASX: NAB) were 4 to 5.5% lower across the week and about 1.5% weaker on Friday, largely on the back of interest rate uncertainty.
Despite the market gloom, investors found a few bright spots.
“It’s been a tough week for investors in terms of trying to work out where the value is in the market,” Sebastian said.
Gold producers remained in favour with the sector index climbing 3.3% on Friday.
Sector leader Newcrest Mining (ASX: NCM) jumped 4% on Friday and 16% over the month as the weaker Australian dollar made US dollar-denominated gold more attractive.
Northern Star Resources (ASX: NST) added 4% over the week and nearly 30% over the month to $2.51 and St Barbara (ASX: SBM) climbed 4.3% – nearly doubling over the month – to 91.5 cents