Australian shares down 2.7% over the week
Australia’s share market fell 2.7% this week, leaving it down nearly 9% over the month as lukewarm earnings announcements and jitters over China’s currency devaluation made for the sharpest monthly decline since the global financial crisis.
CommSec’s Juliana Roadley said uncertainty over developments in China has weighed on investor sentiment.
“Every day we’ve seen the market fluctuating at about 11.15am when we see the yuan start to trade.”
Last week, China devalued its currency, the yuan, by 4.4% to stimulate its economy. China is Australia’s largest trading partner, taking one-third of our exports. A weaker yuan makes those exports more expensive.
Australia’s benchmark S&P/ASX 200 index, down more than 100 points on Friday afternoon, recouped some losses in late trading, closing at 5,214.60, down 74 points, or 1.4%.
Over the week, the index shed 143.9 points, or 2.7%, but over the month, the key stocks gauge gave up 494 points, or 8.7%, the worst monthly performance since October 2008, when the GFC emerged in earnest on global financial markets.
Energy stocks lead declines
In a full week of earnings announcements, sectors were down across the board.
The energy sector led declines, falling 6% over the week and 16% over the month as crude oil prices continued to drop. In US trade on Thursday, a barrel of benchmark West Texas crude slid to US$40.21 a barrel, its lowest level in 6.5 years.
“All the movements coming through in the oil markets have been a concern and what we’ve seen of course is those energy stocks being sold off,” Roadley said.
“That’s continued today because we’ve had Woodside and Santos in the last two days coming out with results that haven’t been that great. The Origin Energy result, as well, was a bit of a disappointment,” she said.
Shares in Woodside Petroleum (ASX: WPL) fell 3.8% to $31.56 after the oil and gas producer posted a 39% decrease in first-half net profit. In addition, its fully franked dividend of US66 a share was 40.5% below the US$1.11 paid the same period a year earlier.
Santos shares slid to $5.18, their lowest level in more than 10 years, after the company reported a first-half profit 82% below the same period last year. Santos shares closed at $5.60 on Friday, down 6.7% over the week and 25% over the month.
Consumer staples a respite
The consumer staples sector held up relatively well, ending the week virtually flat.
Wesfarmers (ASX: WES) climbed 1% over the week to $40.81 after its retail portfolio drove annual underlying net profit 8.3% higher to $2.44bn.
Wesfarmers owns Coles supermarkets, Bunnings hardware chain, Officeworks, Kmart and Target.