Nukes And T3 Rattle Market
The Age
Tuesday October 10, 2006
NUCLEAR fears and a negative response to Telstra's $8 billion prospectus for the T3 float sent stocks tumbling in early afternoon trading, but the market rallied to finish down 0.4 per cent.
The S&P/ASX 200 Index closed 21.6 points lower at 5199.1 after falls in Woolworths, National Australia Bank and Telstra.The benchmark index had been up 0.2 per cent, but North Korea's announcement on its nuclear weapons test sent it down about 40 points to 5173.1. Australian Foundation Investment Company managing director Ross Barker said Australian investors would wait to see what happened in the US and Japanese markets before reacting to the nuclear testing. (Japanese markets were closed for a public holiday.)"It was a bit of shock to people that it happened," he said. "It is, however, a bit early at this stage but people are really watching it and a lot depends on what happens overnight."Mr Barker, who manages one of the biggest institutional investors in Telstra with more than 29 million shares, described the telco's prospectus as "well crafted" to make it attractive to retail investors.But Telstra lost almost all last week's gains to close the session down 9? at $3.74, with the market put off by the Government's decision to leave open the door to sell an extra $1.3 billion worth of shares above the originally stated $8 billion.Woolworths tumbled 40? to $20.58 and rival retailer Coles Myer shed 9? to $14.02. NAB lost 30? to $37.25.Sporting goods company Rebel Sport rose 14? to $4 after a 17.4 per cent lift in sales revenue to $91.3 million in the September quarter.Bendigo Mining, after cutting its gold reserves by a third, had the biggest one-day fall, shedding 28?, or almost 22 per cent, to close at $1. Rival gold stocks Newcrest Mining and Lihir Gold picked up the slack, benefiting from investors searching for defensive stocks after North Korea's nuclear test. Newcrest was up 40? at $21.55 and Lihir rose 11? to $2.95.Shares in takeover target Australian Pharmaceutical Industries jumped 26?, or 11 per cent, to $2.62 on market speculation that Sigma Pharmaceuticals could afford to pay as much as $772 million for the country's largest drug wholesaler. Last week, Sigma offered an unsolicited $566 million for the company.An expected delay in the cutting of interest rates in the US following the release of weak jobs data late last week saw the Australian dollar slip. The Aussie closed at US74.33?, down from US74.52? on Friday.Investors will be keeping a close eye on newly appointed Reserve Bank governor Glenn Stevens' speech to the Australian Business Economists conference tomorrow and Thursday's labour force data for pointers to interest rate movements.ONLINE? For a free share portfolio tracker, 1pm market updates and news alerts, go to tradingroom.com.au
© 2006 The Age