Bop Fears Keep Investors Away

The Age

Tuesday January 31, 1995

Lisa Kearns

Australian financial markets traded apprehensively yesterday in the lead-up to the release of domestic balance of payments data.

The All Ordinaries index slipped a further 5.9 points to 1856.7 in extremely sluggish trade, which brokers put down to nervousness ahead of the December balance of payment figures widely expected to blow out to a record $2.4 billion to $2.5 billion (the record now is $2.3 billion in January 1990). Turnover was a mere $303.34 million.

By contrast, money market dealers said Australian dollar trade was brisk. The dollar fell as low as 75.55 US cents on negative sentiment left over from last week's subdued inflation data. But buying from the US and Singapore took it back to around 76 US cents. It closed at 75.99 from Friday's 76.11.

The chief foreign exchange dealer at Indosuez Australia, Mr Stuart McPhee, said that barring a truly disastrous balance of payments figure, the Australian currency should regain its broad trading range of late, moving up to around 77 US cents this week.

However, weak commodity prices (particularly gold) and Asian holidays for the Chinese New Year over the rest of this week could result in quiet trade, he said.

The Gold index was particularly weak, plunging 38.8 points to 1710.8, after the gold price dropped almost $US5 an ounce in New York ahead of local trade.

Favorable ratings from international credit agencies helped the banking sector to prop up the All Industrials index, which rose 6.8 points to 2719 in contrast to most other sectors, which lost ground.

Mr Tony Baird, a director at Austock Brokers, said the balance of payments data, to be released tomorrow, had caused much uneasiness on the stockmarket, with the All Ords losing 10 points as soon as the market opened, despite a strong showing from the US bond market ahead of trade.

``Everyone is apprehensive about the balance of payments on Wednesday," Mr Baird said.

The credit market barometer, the Commonwealth 10-year bond, strengthened six basis points to 10.17 per cent. But bond dealers are also nervously awaiting the outcome of the monetary policy-setting US Federal Open Market Committee meeting later this week.