Commodities A Drag On Shares

Sydney Morning Herald

Thursday September 12, 1996

By JUSTINE TRUEMAN

Sinking commodity prices took the sharemarket with them yesterday despite Wall Street's strong movement in the opposite direction.

There were further local concerns over resource stocks, particularly market leader BHP, and the All Ordinaries traced a steady downward path for most of the day, with a slight kick-up at the end. It finished 9.7 points weaker at 2236.6.

In New York, the Dow Jones index had risen 27.7 points to 5754.9 points - nearing its all-time high achieved earlier this year.

The positive sentiment out of the US was ignored locally as traders focused on resource stocks which, with the lower commodity prices, are considered overpriced at these levels by some investors.

The prices of copper and base metals such as nickel, tin, lead, zinc and aluminum were all lower in offshore markets. In New York, copper fell US2.3c to US88.4c a pound.

BHP shed 12c to $16, up from a low of $15.58, with rumours circulating that the big miner has a defective pipeline in the North Sea which could cut $70 million from its 1997 profits.

CRA also dropped sharply, down 47c to $17.83 ahead of its interim results.

"I think there's been a massive sentiment turn against them and their pricing. Sentiment has been deteriorating in the big miners for the last four or five weeks," said Mr Paul Jenkins of Suncorp.

WMC, too, felt the heat and was down 13c to $8.20; Comalco lost 20c to $6.92.

The gold sector, which has come back 3.51 per cent this week, lost further ground yesterday following another slide in the price of gold in New York, where it lost US10c to $US383.00.

There were big falls in Newcrest Mining, down 32c to $4.15 after it went ex-dividend 12.5c, and North Flinders Mines was down 21c to $7.90.

Banks continued to be one of the few positives in the market with investors buying them up for their high yields.

Commonwealth Bank rose 14c to $11.24, Westpac was up 4c to $6.40 and ANZ lifted 7c to $6.80. The Commonwealth instalment receipts had another lift of 15c to $7.15, from an issue price of $6. There has also been a 52c dividend.

There was large volume in Burns Philp, with much of the 8.7 million shares put through by First Pacific Stockbrokers. The stock closed down 9c to $1.71.

Brokers said Canadian-based Trimark Financial Corp might be buying. It has built up a stake in the company recently and yesterday's volume would take it to a 13 per cent holding.

There was also good volume in GWA; of 5.5 million shares traded James Capel crossed 5.2 million and the share price was unchanged.

The move sparked talk that the Anderson family may be selling more of its holding.