RTTNews - The stock market in Australia ended in negative territory on Thursday, reflecting the negative mood on Wall Street, where hopes of economic recovery were dented by a spike in bond yields. The positive sentiment generated by better-than-expected existing home sales data was offset, as house inventories increased, inviting mixed reaction from traders on Wall Street who lacked conviction about a recovery. Resource stocks declined following drop in copper and oil prices in the international market.
A report from the National Association of Realtors said that existing home sales rose 2.9% to an annual rate of 4.68 million units in April from a downwardly revised rate of 4.55 million units in March. Economists had expected sales to rise to a 4.66 million unit rate from the 4.57 million unit rate originally reported for the previous month. While the pace of existing home sales increased compared to the previous month, total housing inventories at the end of April represented a 10.2-month supply compared with a 9.6-month supply in March. In another development, the Treasury Department's auction of $35.0 billion worth of 5-year notes drew a high-yield of 2.310% while attracting moderately strong demand, with the bid-to-cover ratio coming in at 2.32.
Across-the-board selling was witnessed in late trading on concerns higher cost of borrowing might apply brakes on economic recovery. The Dow closed down 173.47 points or 2.1% at 8,300, the Nasdaq closed down 19.35 points or 1.1% at 1,731 and the S&P 500 closed down 17.27 points or 1.9% at 893.
After opening unchanged from previous close at 3,795, the All Ordinaries slipped into negative territory on weak cues from Wall Street and continued to trade in the red for the rest of the session. Lower copper and oil prices dragged down the indices to as low as 3,737 by mid-day. Financial stocks were also weaker on concerns that rising yields might curtail attempts to reduce interest rates and pour cold water on recovery hopes. The index ended down by 41.40 points, or 1.09%, at 3,754. The benchmark S&P/ASX 200 Index followed a similar trend and ended up at 3756, down 45.4 points or 1.2%.
On the economic front, the Australian Bureau of Statistics revealed that total new private capital expenditure in the country declined a seasonally adjusted 8.9% in volume terms sequentially during the first quarter of 2009, higher than economists expectation of a 6% decline. In the fourth quarter of 2008, private capital expenditure rose 6%. In another report, the Conference Board stated that its Leading Economic Index increased for the second straight month by 0.4% in March, while the Coincident Index increased 0.2%.
Resource stocks led the decline after copper price slipped in the international market for the first time in five sessions. BHP Billiton lost 1.82%, Orica slipped 1.63%, Oz Minerals shed 4.63% and Rio Tinto edged down 0.56%
Crude oil price for July delivery closed lower by 28 cents at $63.19 a barrel in Asian trading, following concerns about economic recovery as bond yields advanced. On Wednesday, light sweet crude for delivery in July, rose $1 to end at $63.45, as traders looked forward to the oil inventory report and Thursday's OPEC meeting.
Mixed trading was witnessed among oil stocks. While Woodside Petroleum added 0.87%, Santos slipped 0.55% and Oil Search shed 1.11%.
Among the financials, ANZ Banking, which was on a trading halt on Wednesday ahead of its capital raising plan, led the decline, dropping 1.22%. Commonwealth Bank of Australia was down 3.36% Macquarie Group lost 2.05%, and Westpac Banking shed 191%. National Australia Bank edged down 0.55%.
Gold stocks advanced on higher bullion prices. Lihir Gold advanced 1.58%, New crest Mining added 0.37% and Sino Gold advanced 0.64%.
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