Market Wrap: ASX drops 2% as correction deepens

Market Reports

The Australian share market has today posted its biggest daily drop since mid 2013 and finished below 5,200. Following a sell-off on global markets the local benchmark index sank more than 2 per cent by close on the back of broad based losses. 
 
The benchmark’s only six stocks to end on positive territory were Liquefied Natural Gas Limited ASX:LNG), Echo Entertainment Group Limited (ASX:EGP), Senex Energy Limited (ASX:SXY), Premier Investments Limited (ASX:PMV), Genworth Mortgage Insurance Australia Limited (ASX:GMA) and Village Roadshow Limited (ASX:VRL). All sectors ended more than 1 per cent down with energy shedding 3 per cent by close and the miners following with a decline of 2.8 per cent. 
 
The falls came after a busy week for the local bourse, beginning with Labour Day break for much of Australia, followed by the Reserve Bank of Australia (RBA) keeping rates on hold and official jobs numbers. Sentiment was hit by the International Monetary Fund’s (IMF) downgraded global growth outlook, ongoing geopolitical tensions and concerns over the spread of Ebola, offsetting dovish minutes from the US Federal Reserve’s latest meeting.  
 
Figures
 
The S&P/ASX 200 index plunged 108 points today, extending the weekly retreat of 130 points to end at 5,188. 
 
The value of trades was $5.35 billion on volume of 868 million shares at the close of trade. 
 
The top three stocks by value were BHP Billiton Limited (ASX:BHP), Commonwealth Bank of Australia (ASX:CBA) and Westpac Banking Corporation (ASX:WBC)
 
On the futures market the SPI is 114 points down.
 
Wall Street
 
America’s major indexes have moved lower over the trading week: The Dow Jones Industrial Average has fallen 0.9 per cent. The S&P 500 Index has fallen 0.9 per cent. The NASDAQ has fallen 1.2 per cent. The 100 Index has fallen 0.4 per cent. 
 
Economic news
 
Home loans fell more than expected in August. The Australian Bureau of Statistics reports home loans granted dropped 0.9 per cent, the value of new housing commitments dropped 1.2 per cent and the share of first home buyers dropped to a record low in August. 
 
Company news 
 
Shares in Biotron Limited (ASX:BIT) soared after trial results of its lead antiviral drug showed a possible cure for hepatitis C. The Australian drug developer reports all of the patients who finished the phase II clinical trial of BIT225 had undetectable levels of the virus 12 weeks after ceasing all treatment. Biotron says to show undetectable levels 12 weeks after treatment is considered to be a prediction of permanent clearance of the virus and effectively a cure. Shares in Biotron soared 50 per cent to end the week at $0.15.  
 
Shares in Orbis Gold Limited (ASX:OBS) climbed after revealing it is in the eyes of suitors. The gold producer says it has received confidential approaches in relation to a range of potential transactions including both at a corporate and asset level. Orbis Gold has appointed Merrill Lynch as its defence advisor and affirmed its commitment to advancing its Natougou Gold Project in Burkino Faso. Shares in Orbis Gold climbed 20 per cent to end the week at $0.42.  
 
Shares in Sandfire Resources NL (ASX:SFR) ended 3.34 per cent lower after responding to the Australian National University’s (ANU) decision to sell its stock due to its social responsibility policy. The copper and gold miner says ANU's decision was not as informed as it should have been and determined with a poorly researched, inaccurate, misleading and flawed profile of the company. 
 
Shares in New Zealand based Xero Limited (ASX:XRO) finished 7.82 per cent lower despite being named BRW’s Most Innovative Company 2014. The accolade comes in the same week the cloud-based accounting software company forecast strong growth to continue for the foreseeable future ahead of releasing its interim report on November 20.
 
Best and worst performers
 
The sector with the fewest falls was utilities, dropping 1 per cent to close at 5,775.
The worst performing sector was energy, sinking 3 per cent to close at 13,334 points.
 
The best performing stock in the S&P/ASX 200 was Liquefied Natural Gas Limited ASX:LNG), gaining 6.09 per cent to close at $2.96. Shares in Echo Entertainment Group Limited (ASX:EGP) and Senex Energy Limited (ASX:SXY) also closed stronger.
 
The worst performing stock was Whitehaven Coal (ASX:WHC), sagging 8.81 per cent to close at $1.50. Shares in Resolute Mining Limited (ASX:RSG) and Beach Energy Limited (ASX:BPT) also closed lower. 
 
Commodities
 
The price of gold is buying $US1,222 an ounce, up $10.87 over the week. 
Light crude is $1.54 lower at $US85.77 a barrel. 
 
Currencies
 
The Australian dollar is buying $US0.8769.