Australian sharemarket down 0.75pc amid Rio meltdown
Sponsored LinksRio Tinto crashed 36 per cent to $40.91 after its delayed opening at 11am, further amplifying its performance in London overnight amid expectations BHP would take its money elsewhere.
BHP Billiton, which has a bigger weighting on the market, surged 8.54 per cent to $28 as investors cheered its decision to walk away from the bid in the face of worsening economic conditions and falling commodity prices. The S&P/ASX 200 was down 27 points, or 0.75 per cent, at 3596.4. The futures market had been pointing to a 25 point rise on the strength of support for BHP.
The All Ordinaries was down 41.9 points at 3533.5.
MF Global senior client adviser Anthony Anderson said: “There were a lot of things stacked up against (the bid). I think … they will look at assets that are smaller and individually suited to their portfolios.”
Earlier, traders had said the futures market was pointing to a 25-point jump in local shares once BHP and Rio start trading at 11am.
IG Markets head of dealing Oliver Stevens said earlier today, soon after the market had opened: “The market has disappointed.”
Rio, the world’s third-largest miner, fell more than 30 per cent in London overnight after BHP stunned investors by walking away from its $135 billion takeover bid. BHP rose more than 7 per cent on the announcement.
The Big Australian said it could no longer justify pursuing the bid – billed as the biggest acquisition in corporate history when it was launched 12 months ago – in the face of deteriorating economic conditions and sharply lower commodity prices.
Wall Street had a mixed performance last night after the US Federal Reserve unveiled plans to pump $US800 billion ($1.23 trillion) into the system.
The Standard & Poor’s 500 finished higher for the third day in a row, gaining 0.66 per cent to 857.39, while the Dow Jones Industrial Average was up 0.43 per cent at 8479.47. The Nasdaq Composite Index slipped 0.5 per cent to 1464.73.
The Fed’s announcement overshadowed more glum US economic data, which showed further declines in house prices and the biggest quarterly drop in gross domestic product growth in seven years.
Copper and crude oil pared yesterday’s massive gains after the World Bank cut its forecast for 2009 gross domestic product growth in China, the world’s biggest consumer of some commodities.
The World Bank has forecast that GDP growth in China will fall to 7.5 per cent, which would be the slackest pace since 1990.
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