Futures Ruin A Good Day

Sydney Morning Herald

Friday January 20, 1995

By MATTHEW KIDMAN

The Australian sharemarket tried its hardest to head back over the 1900-point mark yesterday but, in a display of its current fragile state, fell away in the afternoon in response to a sharp downturn on the futures market.

Brokers said the morning trading, which saw the All Ordinaries gain 10 points, was fuelled by a mixture of Wednesday's late afternoon buying and a perception that the earthquake in Japan would be beneficial to the Australian commodity based stocks.

But as the day unfolded the pluses slowly vanished. The main index was sitting 5.8 points higher at the closing bell at 1894.4 but the real volatility through the day was experienced on the futures market. The March spot SPI contract made a 21-point turnaround during the day to go from 10 points up to 11 points down, eventually resting at 1905.

Dealers attributed the intra-day slide to a combination of events.

Renewed talk about the next interest rate rise after strong import data for December, a warning from the Reserve Bank that growth might be impinged by wages growth and a sell portfolio handled by ANZ McCaughan were at the top of the list.

A selloff on the the major Asian markets added to the decline in sentiment, with the Hang Seng shedding 208 points to 7,422 and the Nikkei diving 147.6 to close the day at 19,076.

Market players said morning trading was buoyed by the appearance of some offshore money flowing into the big end of the resources market.

BHP climbed to $19.52 before fading late in trading to finish down 4c at $19.34.

A similar path was taken by CRA, which rose 2c to $17.42 after touching $17.62, and Western Mining, which ended steady at $7.35 after peaking at $7.46.

On the industrial side, News Corp accounted for a large proportion of the sector's 9.6 point gain, with the ordinary shares up 7c to $5.07 and the preference shares up 13c to $4.58.

The most glaring loss in the industrial market was taken by Brambles, falling 20c to $11.60, close to a six-year low. Analysts said the transport group was suffering from a perception that it might need to raise money through a rights issue to fund some of its planned projects.

In the building materials sector, James Hardie rose 8c to $2.23 while Pioneer dipped 6c to close the day at $3.19.