Investors Slug Mining Stocks

The Age

Monday September 23, 1996

Manika Naidoo

Australia's big miners yesterday continued to take the brunt of a sell-off on the stockmarket following a further deterioration in commodity prices and nervousness about US interest rates.

In what traders described as an anxious day ahead of tonight's US Federal Reserve meeting, battered resource stocks led falls across all sectors, dragging the All Ordinaries Index 21.6 points lower to 2219.2.

BHP was hit again ahead of today's annual meeting in Sydney. Friday's thumping, prompted by the company's disappointing quarterly profit result, was compounded by a 22-cent hiding yesterday. It finished at $15.85, its lowest point for two years. CRA and WMC fared worse, with CRA plunging 37 cents or 2.01 per cent to $18.08 and WMC slumping 27 cents or 3.3 per cent to $7.89. MIM shed 4 per cent or six cents to end at $1.43.

Mr Oliver Messenger, from Austock Brokers, said a stronger local currency and weaker commodity prices would continue to pressure resource stocks.

On Friday night, base metals floundered in London amid concerns of over-supply. Copper, which has been pounded in the wake of the Sumitomo trading scandal, fell further in New York to finish 2.55 US cents a pound lower at 89 US cents. Precious metals also slumped.

Gold bullion lost $US1.50 an ounce to $US380.80 - its low point for the year. The Gold Index shed 28.6 points, or 1.6 per cent, to 1768.6.

Interest-rate speculation ahead of the US Federal Reserve monetary policy meeting kept trade in industrial stocks tight.

The All Industrials Index fell 24.7 points to 3436.9, weighed down by poorly performing banking and transport stocks.

Mr Rohan Carr, from Holst Sharebrokers, said the transport sell-off pointed to investor fears of a weakening economy: "Transport is always the first sector to fall or rise on the strength of the economy." Brambles reflected the mood, closing 35 cents weaker at $18.95.

The Commonwealth topped the banks' falls, slipping 12 cents to $11.06. Westpac lost four cents to $6.20, National Australia Bank fell eight cents to $12.74 and ANZ ended five cents down at $6.87.

Among the leaders, News Corp was down eight cents to $6.55, Amcor ended four cents weaker to $7.44 and Santos, following its purchase of MIM's gas and oil business, was up three cents to $5.03.

A lifeless bond market ended slightly firmer as investors began to focus on the US rates meeting. An expected 25-basis-point interest rate rise is expected but recent evidence of a slowing US economy could lead the Federal Reserve to delay any increase.

Ten-year bond yields finished at 7.92 per cent from 7.94, while 90-day bank bills finished at 7 per cent from 7.1.

The Australian dollar closed at 79.28 US cents from 79.19 cents on Friday.