Weaker Commodity Prices Undermine Market Sentiment

Sydney Morning Herald

Wednesday September 20, 1995

By MATTHEW KIDMAN

Softer commodity prices and a poor response to Japan's $180 billion economic stimulus package saw the Australian sharemarket fade yesterday afternoon to close down for the second consecutive session.

Despite another fall on Wall Street overnight and a drop in base metal prices, the All Ordinaries index managed to be up for most of the morning session. However, a bout of late selling set in leaving the All Ords down 1.2 points at 2162.4 by the official close.

The futures market also experienced a poor day with the September SPI dipping 3 points to close at 2172.0.

"It's a funny market at the moment," said Hartley Poynton director Mr Ben Laurance. "It has the ability to be up half a dozen points and then it closes down."

Most of yesterday's selling centred on the resources side of the market after aluminium, lead and zinc prices fell offshore resulting in the All Mining index declining 0.6 of a per cent.

Western Mining, which has shown some strength during the week, lost 8c to close at $8.90 while BHP also fell 8c to $18.52 as the ramifications of the Ok Tedi situation continued to flow through.

Afternoon sentiment was soured slightly by the announcement of the economic stimulus package in Japan, which triggered a wave of selling with the Nikkei index closing 275.74 points down at 18,198.64. Market observers said the announcement did little to encourage investors that long-term economic growth in Japan was assured.

Unlike previous sessions, the banks did not hold up the market. While the regionals performed quite strongly on increasing speculation about takeover activity the majors were down on profit-taking.

CBA dropped 10c to $10.66, Westpac lost 5c to finish the day at $5.42, NAB faded 4c to $11.96 while ANZ managed to lift 1c to $5.71.

Yesterday's trading did little to inspire investors looking ahead.

"This time of the year is traditionally pretty quiet and we are just waiting to see how the economy is travelling," said Mr Merv Peacock from the AMP.

"The other missing ingredient at the moment is the lack of overseas interest."

Elsewhere, TNT attracted attention with the stock jumping 5c to $2.02 as more than 5.4 million shares changed hands. Brokers said buying interest had been sparked by a roadshow the company was staging in Europe.

Coles Myer rose a further 3c to $4.33 and Amcor fell 26c to $10.60 after going ex-div 20c.