Australian stocks fall 3.1% over the week
Australian shares slumped 3.1% over the week, extending declines from the previous two weeks, as falling commodity prices hurt energy and mining stocks.
Gains on Wednesday and Thursday were not sufficient to lift the S&P/ASX 200 index, which sank 1.5% on Friday alone. Over five days, the benchmark stock gauge lost 163.7 points to finish the week at 5,051.3.
The Organisation of Petroleum Exporting Countries said in its November market report that oil inventory surpluses were 210 million barrels above their five-year average due to increased global production.
Brent crude oil futures traded at US$44.08 a barrel at around 4:30pm AEDT, a 7% decline from last Friday’s close, while the WTI crude dropped 6.2% from last Friday to US$41.55 a barrel, according to data compiled by Bloomberg.
“Unless they cut back on production, which doesn’t seem like anyone is doing at this stage, the signs are there’s still going to be oversupply and that’s probably going to keep the price of oil low for the time being,” said CommSec market analyst Steven Daghlian.
Gold price slumps
Gold spot price dropped to US$1,082.56 per ounce today, its lowest level since February 2010, according to Bloomberg data.
Newcrest Mining, Australia’s largest gold miner, slid 4.1% today to $11.13.
The Australian dollar traded at 71.34 US cents at around 4:55pm AEDT, an increase of 1.3% from last Friday, even as prices of commodities fell.
Stronger than expected employment data for October, which was released yesterday, partly helped support the local currency, said Daghlian.
BHP, Santos plunge
All sectors except information technology in the ASX 200 suffered losses this week, with energy and materials the two worst performing sectors.
The S&P/ASX 200 Energy Index plummeted 8.4% over the week, led by Santos, Whitehaven Coal and Origin Energy.
Santos sank 22.9% over five days.
“The oil price was down substantially but Santos had a lot more to do with capital raising. They raised almost $1.2bn from institutional investors to pay down debt but that was at a discount to the price that it was trading at before,” said Daghlian.
Meanwhile, Whitehaven Coal lost 13.2%, while Origin Energy slipped 12.2%.
The S&P/ASX 200 Materials Index shed 7.6%, dragged down by BHP Billiton.
BHP tumbled 10.9% over the week, as more negative news came out of its iron ore mine disaster in Brazil. So far, nine people have died and 19 are still missing after two tailings dams broke.