TH: Australian sharemarket falls as $A rises in aftermath of earthquake
AUSTRALIA'S sharemarket closed at a 14-week low as uranium miners bled and Tokyo tumbled 6 per cent amid fears of a nuclear catastrophe.
But the ASX managed to claw back some of its earlier losses after the Bank of Japan injected record funds into money markets following the devastating tsunami triggered by the biggest earthquake in Japan's recorded history on Friday.
IG Markets market strategist Ben Potter said Asian markets were all lower, with Japan's Nikkei 225 plunging more than 6 per cent in afternoon trade ahead of a BoJ meeting later in the day.
“Speculation suggests the BoJ will intervene and try to weaken the yen materially,” Mr Potter said.
“The last thing Japan needs at the moment is a strong yen acting as a headwind.”
The benchmark S&P/ASX 200 index was down 18.4 points, or 0.4 per cent, at 4626.40, while the broader All Ordinaries index retreated 24.7 points (0.52 per cent) to 4710.10 - its lowest finish since last December 6 in 2010.
Mr Potter said traders had been solely focused on news out of Japan.
The uranium sector was battered after another explosion at a nuclear power plant in Japan, fuelling meltdown fears.
The Rio Tinto-managed Energy Resources of Australia, the world's fourth largest uranium miner, bled $1.15 (12.23 per cent) at $8.25.
Toro Energy plunged 3c (23.08 per cent) to 10c, fellow uranium explorer Extract Resources dropped 82c (7.71 per cent) to $9.81 and uranium miner Paladin Energy was down 78c (16.49 per cent) at $3.95.
Liquefied natural gas (LNG) giant Woodside was up 40c at $42.20 after ratings agency Fitch said renewed safety concerns surrounding nuclear power generation could benefit the development of new LNG projects in Australia.
Among other oil and gas producers, Santos lost 2c to $14.16 and Oil Search was steady at $6.62.
The major miners were mixed, with BHP Billiton down 10c at $44.09 while Rio Tinto put on 35c to $79.15.
The major banks closed weaker. Westpac was 3c lower at $22.87, Commonwealth was down 28c at $50.58, ANZ gave up 21c to $22.96 and NAB eased 6c at $24.68.
The spot price of gold in Sydney at 1627 AEDT was $US1424.00 per fine ounce, up $US10.39 from Friday's closing price.
IG Markets strategist Mr Potter said: “Stocks quickly fell away, accelerating as the Japanese market opened mid-morning. However, news that the BoJ had pumped in a record amount of liquidity saw markets recover significantly.”
Preliminary estimates put repair costs from the disaster in the tens of billions of dollars - a huge blow to the already fragile Japanese economy - while the death toll is climbing beyond 2000 amid expectations it could reach tens of thousands.
Mr Potter said the weight of uncertainty on investor confidence and sentiment meant it would be extremely difficult for the local market to recover some of the recently lost ground. The domestic bourse has been down five out of the past six sessions.
Elsewhere, the benchmark Nikkei Stock Average was recently at 9631.45, breaking below the key 10,000 level.
South Korea's Kospi Composite was flat. Hong Kong's Hang Seng Index was 0.5 per cent lower, Taiwan's main index shed 0.8 per cent, and the Shanghai Composite index was flat.
Dow Jones Industrial Average futures were down 49 points in screen trade.
The Australian dollar pared a late-Friday rally in today’s Asian trading as the devastating impact of the Japanese disaster continued to rattle risk-sensitive assets.
Australian bonds were helped by the trend in trading, particularly on the short end of the curve.
Monday's currency slide was mostly driven by news of an explosion at a Japanese nuclear reactor, as well as another tsunami warning. Friday's initial trading had been to sell out of the US dollar, which lifted the Australian dollar as a result, but the follow-through move on Monday was mostly the opposite.
Still, traders and economists were both in agreement that, over time, Australia could be particularly well positioned in the aftermath of the Japanese disaster, with the demand on coal exports likely to be enormous.
"Should equity markets hold up around Asia and the Australian dollar breaches $US1.0220, I see it going to $US1.0330 and very quickly," said Kurt Magnus, executive director of foreign exchange sales for Nomura in Sydney.
At 0510 GMT, the Australian dollar was changing hands at $US1.0076, up from $US1.0028 late Friday and this morning’s low of $US1.0066. Against the Japanese yen, the Australian dollar traded at Y82.775, down from Y83.04.
Returning to equities, Australian steelmakers and thermal coal miners were out-performers as the shutdown of parts of Japan's nuclear power network could make thermal coal one of the major beneficiaries, while uranium companies fell as the problems in Japan stoked concerns about nuclear power's longer-term viability around the world.
Tokyo shares slumped 6.1 per cent after the massive quake that struck Japan and caused a destructive tsunami Friday. South Korea's Kospi Composite was flat. Hong Kong's Hang Seng Index was 0.5 per cent lower, Taiwan's main index shed 0.8 per cent, and the Shanghai Composite index was flat.
Even so, the economic and fiscal damage in Japan caused by the 8.9 magnitude quake remained unclear, while an ongoing emergency at a key nuclear power facility in the country's north-east was being closely watched after an explosion hit the No 3 nuclear reactor building at Tokyo Electric Power Co's Daiichi plant in Fukushima Prefecture.
Investors were also looking at the ripple effects of the weekend euro-zone debt accord and the continuing Libya crisis, particularly the Arab League's support for a no-fly zone over the country. In Asia, the euro-zone news was taken as positive for the euro, which gained against the US dollar and the yen.
In terms of the Japan quake, Credit Suisse strategist Shun Maruyama said in Tokyo: “We possibly cannot ignore the impact that this quake will have in terms of geographical span and scale - as well as the psychological impact.”
Still, some analysts were tipping Japan stock declines to slow.
Nicholas Smith, director for equity research at MF Global FXA Securities, said while the quake was horrific, “in total, the area affected by the quake and tsunami does not comprise a big enough chunk of Japan's gross domestic product to warrant an over-reaction (in stock selling) based on that criteria alone”.
At Japan’s sharemarket, shares of Tokyo Electric Power - operator of the troubled nuclear reactor facility in Japan's north-east - were ask-only. A stock is ask-only when there's too large a gap between buyers' bids and sellers' offers, resulting in no trades being done.
Nissan Motor was down 10 per cent, Honda Motor was down 7.4 per cent and Toyota Motor shed 7.8 per cent after they said they will suspend operations at nearly all their domestic plants. Financial shares were sharply lower, with Sumitomo Mitsui FG down 7.2 per cent.
JX Holdings were down 16 per cent and Cosmo Oil plunged 26 per cent after fires broke out at their refineries following Friday's earthquake.
Trading in Chinese shares was choppy as market participants weighed the implications of the Japanese disaster, while lower than expected new yuan-loan data for February indicated that Beijing's control on credit is tighter than anticipated.
Lead Japanese government bond futures surged 0.60 to 139.80 points as stocks in Tokyo fell, while the 10-year cash JGB yield was down 3.0 basis points at 1.215 per cent.
Oil and commodity markets were being driven largely by Japanese headlines.
April Nymex crude oil futures were down $US1.65 at $US99.51 per barrel on Globex.
The three-month London Metals Exchange copper contract was down $US79 at $US9111 per ton, reversing an earlier rise. Copper already declined last week on concerns about the level of Japanese demand and as risk appetite turned sour.
