The market was always set for a gloomy session after a plunge in US and European stocks overnight over fears the political standoff in the US could lead to a default or downgrade of US sovereign debt.
The benchmark S&P/ASX 200 index fell 73.6 points to close at 4463.80, while the All Ordinaries Index dipped 73.4 to 4539.2 in today’s trade.
“There’s increased nervousness in equity markets as the debt ceiling deadline draws near,” Pengana Capital’s Tim Schroeders told Bloomberg.
“A de-rating of US debt down the track could reduce monetary liquidity, and some bank earnings may be hurt. Exporter-led earnings are increasingly at risk under such a volatile backdrop.”
The major miners once again weighed on the market.
BHP Billiton slipped A97c to close at $42.03 after The Australian reported analysts were expecting the miner to delay uranium production at the Olympic Dam mine expansion in the wake of the Fukushima nuclear disaster in Japan.
Meanwhile, copper concentrate shipments from Chile’s Escondida mine, the world’s largest copper mine, have been blocked following a week of strike action, resulting in operator BHP declaring a force majeure.
Rio Tinto closed the session $1.39 lower at $81.20 while Fortescue Metals Group finished 7c lower at $6.46.
Spot gold was trading as high as $US1617.42 an ounce today after yesterday hitting an all-time high of $1628.05/oz.
Newcrest Mining fell A33c to $40.17, Perseus Mining finished 9c lower at $3.13 and Kingsgate
Consolidated fell 16c to $9.17.
Base metals were mixed on the London Metal Exchange in today’s trading in Asia. Copper for three-month delivery was trading 0.2% higher at $US9795 per tonne on fears of tightening supply of the red metal in the wake of BHP’s declaration of force majeure at Escondida.
Nickel was trading 0.06% lower at $24,380/t while zinc was down 0.2% to $2517/t.
The Australian dollar was trading at $1.103 as at 4:24pm AEST after yesterday reaching $1.108, the strongest since it was freely floated in 1983.
AMP Capital’s Sydney-based head of strategy Shane Oliver wrote today in a note that the
Australian dollar may rise to between $US1.20 and $1.30 as a mining boom drives up national income.
