THE week started optimistically. But then panic gripped. And confusion reigned. By the end of it all, the market managed to close higher, but not by much.
For the week, the benchmark S&P/ASX 200 Index rose 12.8 points, or 0.3 per cent, to 4325.8.
Things were sent spinning by the falling price of iron ore. Slipping below $90 a tonne last week, it continued to fall this week and after months spent watching it lose value, it seemed Australia’s miners had had enough.
Fortescue Metals said it was deferring some development work in response to the uncertainty created by falling prices, before sacking staff across the country.
The company’s shares plummeted and its owners held quick meetings with creditors. The news raised fears that more mining projects could be junked and so resource stocks got whacked. Fortescue was down 23¢ to $3.31
But by yesterday, resource stocks were somewhat back in favour – particularly after Chinese authorities moved to stimulate their economy with several big infrastructure projects – and it was the turn of companies with an exposure to the Australian dollar to cop a beating.
After the European Central Bank announced a new bond-buying program on Thursday, in a bid to help struggling European countries with troubled bonds, the Australian dollar jumped nearly one US cent yesterday.
Healthcare stocks fell heavily, with CSL losing $1.08, or 2.4 per cent, to $44.01.
The local market did not rally as much as those in Europe and the US after the ECB announcement.
Frankfurt (up 2.9 per cent), Paris (up 3.1), and London (up 2.1) all jumped higher, as did US stocks.
Analysts said the rising dollar had something to do with it.
”In this era when commodity prices are lower than they were, the Australian dollar needs to be lower,” NAB’s Peter Jolly said.
”But the fact that it’s not, and the fact that it rallied today, cuts a little bit into growth prospects.”
For the week, Billabong International rose 6.5¢, at $1.42, after the surfwear retailer said it would formally consider a takeover after a second offer in six weeks.
BHP Billiton rose 19¢ to $31.98 after it said it would push ahead with its $US1 billion Eagle Ford petroleum expansion in Texas. It aims to boost worldwide production by 8 per cent.
Coca-Cola Amatil rose 7¢ to $13.76 after it completed its $58 million takeover of the maker of Fiji Bitter.
Consolidated Media Holdings lost 3¢ to $3.42, while News Corp rose $1.09, to $23.86, after a formal offer for James Packer’s company.
Caltex Australia rose 55¢ to $16.17 after it raised $550 million from investors.
Lynas Corporation rose 18¢ to 82¢ when the rare-earths miner was granted a temporary licence for its controversial $US800 million refinery in Malaysia. Qantas rose 11¢ to $1.26. With AGENCIES
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