Market Wrap: Debt fears hit Aus shares

Market Reports

Following soft leads the Australian share market retreated throughout the day to end more than 1.5 per cent down. All sectors dropped into the red as concerns heightened over the US debt gridlock, stoking fears the nation may fall into default if a resolution is not reached by next week’s deadline.

The S&P/ASX200 Index finished 72 points down at 4,530. On the futures market the SPI is currently 74 points lower.

Economic news

Australia's producer prices, a key measure of inflation, rose in line with expectations in the second quarter. The Australian Bureau of Statistics has reported that prices at the final stage of production increased 0.8 per cent in the June quarter, representing an annual rise of 3.4 per cent.

Company news

Premier Investments Limited (ASX:PMV) has again cut its full year earnings guidance and announced that it will close up to 50 stores in its retail portfolio. The retail fashion chain group now expects to deliver consolidated underlying profit before tax of between $72 million and $74 million in fiscal 2011, down from up to $110 million forecast in 2010. Premier Retail CEO Mark McInnes says the company will also likely incur up to $16 million in one-off charges as a result of the restructure. Shares in Premier Investments fell 3.58 per cent today, closing at $5.12.

In a period it was impacted by a ban on live cattle exports Australian Agricultural Company Limited (ASX:AAC) has posted a first half net loss of $12.6 million, but maintained its full-year earnings guidance. Australia’s largest beef cattle company still expects EBITDA of between $50 million to $60 million in fiscal 2011. The earnings forecast includes the company’s recent sale of its Meteor Downs cattle breeding property to Xstrata for $21.6 million. Shares in Australian Agricultural Company closed 1.42 per cent lower today at $1.39.

Westpac Banking Corporation’s (ASX:WBC) Bank of Melbourne brand has been resurrected. Today 40 Bank of Melbourne branches opened in Victoria. Bank of Melbourne is target ting an additional 85 branches and 200 ATMs over the next four years as part of its multi-brand strategy.

Downer EDI Limited (ASX:DOW) has scored a public transport rail maintenance services contract as part of a joint venture with  Bombardier Transportation Australia. Downer says it will earn more than $140 million throughout the seven-and-a-half-year contract, adding to $80 million it will earn from suppling passenger rail cars as part of the same JV.

Shares in Transurban Group (ASX:TCL) fell on news Canada Pension Plan Investment Board had sold its 12 per cent stake in the company for $903.3 million. UBS later confirmed it handled the transaction.

Shares in GrainCorp Limited (ASX:GNC) also ended the day lower after announcing it will buy GermanMalt for $77 million. The company also today advised its full year underlying earnings are tracking well against guidance.

Best and worst performers

All sectors closed in negative territory. The sector with the smallest losses was Telco Services, losing 7 points to close at 1,045. The worst performing sector was Energy, dropping 363 points to close at 14,688. The best performing stock in the S&P/ASX200 was Lynas Corporation shares gained 4.02 per cent to close at $2.07. Shares in Aston Resources and Sandfire Resources also closed in higher. The worst performing stock was AWE, falling 10.2 per cent to close at $1.32. Shares in White Energy Company and Spotless Group also closed in the red.
 
Commodities

Gold is trading at $US1,615 an ounce. Light crude is down $0.82 cents at $US99.05 a barrel.


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