Market Wrap: Manufacturing meltdown slams ASX

Market Reports

The Australian share market plunged 2 per cent today as weak manufacturing figures and headlines stoked fears of a global slowdown. Stocks dropped at open after the US Federal Reserve raised doubts over the duration of its economic stimulus program. Losses accelerated as Ford announced it is pulling out of manufacturing in Australia and economic powerhouse China produced disappointing factory data. All sectors closed lower with the local banks stung the hardest. The Australian dollar received no respite, continuing to trade at near one-year lows. 

Commentary
 
Tom Piotrowski from Commonwealth Bank of Australia’s (ASX:CBA) broking arm Commsec explains how the manufacturing news has impacted the market and what to expect over the next 24 hours. 

Figures

The S&P/ASX 200 index plunged 103 points to end the session at 5,062.

The value of trades was $6.7 billion on volume of 1.3 billion shares at the close of trade.

The top three stocks by value were National Australia Bank Limited (ASX:NAB), Telstra Corporation Limited (ASX:TLS) and Commonwealth Bank of Australia (ASX:CBA)

On the futures market the SPI is 101 points lower. 

Economic news

Manufacturing in the world’s second largest economy has shrunk for the first time in seven months. The HSBC flash China manufacturing Purchasing Managers Index (PMI) came in at 46.6, sinking below 50 for the first time since October 2012 which indicates contraction in the manufacturing sector. The preliminary read renewed concerns about the strength of China’s economy and comes ahead of the final read expected next week.     

Company news

Australia's manufacturing industry was dealt a blow this morning following confirmation 1,200 jobs are set to from car marker Ford as it moves to close all major local operations by 2016. Automotive Holdings Group Limited (ASX:AHE) said it had been expecting the announcement and is confident the Ford dealerships will continue to form part of its product range. The company joined AP Eagers Limited (ASX:APE) in claiming Ford’s news will have no material impact on its business while Elders Limited (ASX:ELD) has advised it is assessing the implications. Shares in Automotive Holdings Group dropped 4.03 per cent today, ending at $3.57. 
 
Australia’s biggest listed gold miner Newcrest Mining Limited (ASX:NCM) has lashed out on private explorer Gold and Copper Resources for launching legal action against it in order to retrieve land. Following the action the NSW government is currently reviewing one of Newcrest’s exploration licenses. Though the license will remain valid while under review Newcrest says it considers all actions to be without merit and will continue to vigorously defend them. Shares in Newcrest Mining declined 2.15 per cent today, ending at $14.55. 

Shares in QBE Insurance Group Limited (ASX:QBE) jumped 6.6 per cent after Standard & Poor’s affirmed its core insurer financial strength rating and raised its outlook on the insurance company.
 
Shares in Sundance Resources Limited (ASX:SDL) soared more than 20 per cent today. Though the West African iron ore developer could offer no reason for the price spike reports have been speculating it is trying to attract new partners or suitors.
 
Shares in James Hardie Industries PLC (ASX:JHX) fell 0.9 per cent after the building products manufacturer booked a 92 per cent annual profit fall due to tough conditions, asbestos liabilities and court action. 

Service Stream Limited (ASX:SSM) lost a quarter of its value after the telco service provider advised the market it has breached its banking covenants.

Best and worst performers

All sectors were mainly marked with red ink by close: The sector with the smallest losses was health care losing 61 points to close at 13,036.
The worst performing sector was telco services, losing 68 points to close at 1,706 points.

The best performing stock in the S&PASX 200 was Discovery Metals Limited (ASX:DML), rising 24.32 per cent to close at $0.23. Shares in Sundance Resources Limited (ASX:SDL) and Horizon Oil Limited (ASX:HZN) also closed higher.

The worst performing stock was M2 Telecommunications Group Limited (ASX:MTU), dropping 10.99 per cent to close at $5.51. Shares in iiNet Limited (ASX:IIN) and Lynas Corporation Limited (ASX:LYC) also closed lower. 
 
Commodities

Gold is trading at $US1,374 an ounce.
Light crude is $0.33 lower at $US93.95 a barrel.

The Australian dollar

The Australian dollar is buying 96.15 US cents.