The Australian share market has closed almost one per cent lower as a steep slide in oil prices and a weaker price for iron ore weighed on the energy and mining sectors.
CMC Markets chief market analyst Ric Spooner said the local bourse had a weak lead from US markets, but the main reason for Tuesday’s fall was the big drop in commodity prices.
“There was the totemic move below $US40 (per tonne) as far as iron ore was concerned and similarly with oil below its recent lows,” Mr Spooner said.
“So that’s had an impact on our energy stocks, and materials stocks have been heavily dealt with as well.”
Mr Spooner said some of the other sectors in the market were doing okay.
Investors believed that if oil prices stayed low, that would keep a lid on inflation.
That meant that central banks such as the US Federal Reserve may be cautious when considering more interest rate rises to follow the first hike which expected this month.
Oil prices slid to their lowest point in nearly seven years overnight after OPEC’s meeting last week failed to address a growing supply glut.
The iron ore price is weaker amid oversupply and falling demand.
Among energy stocks, Santos plunged 50 cents, or 13.12 per cent, to $3.31, and Origin Energy fell 14 cents to $4.98.
Woodside Petroleum descended $1.11 to $26.89 as it called off its takeover bid for smaller rival Oil Search. Oil Search retreated $1.23, or 16.36 per cent, to $6.29.
Among the major miners, BHP Billiton shed 94 cents, or 5.23 to $17.05, Rio Tinto reversed $1.90, or 4.29 per cent, to $42.41, and Fortescue Metals dumped 5.5 cents at $1.805.
Airline operator Qantas, which should benefit from lower oil prices, was 18 cents, or 4.89 per cent, higher at $3.86.
In the banking sector, Commonwealth Bank dipped 37 cents to $80.14, Westpac slipped 28 cents to $32.24, ANZ dropped 45 cents to $26.82, and National Australia Bank eased 25 cents to $29.31.
Among other stocks, asset manager Broadspectrum, formally called Transfield, was 5.5 cents lower at $1.20. Broadspectrum will make a formal recommendation to shareholders in January on whether they should accept a takeover bid by Spanish infrastructure giant Ferrovial.
KEY FACTS:
* On Tuesday, the benchmark S&P/ASX200 index was down 47.1 points, or 0.91 per cent, at 5,108.6 points.
* The broader All Ordinaries index was down 47.9 points, or 0.92 per cent, at 5,158.0 points.
* The December share price index futures contract was 40 points lower at 5,109 points, with 30,647 contracts traded.
* The price of gold in Sydney at 1700 AEDT was $US1,072.30 per fine ounce, down $US12.80 on Monday’s price of $US1,085.10.
* National turnover was 2.3 billion securities traded worth $5.5 billion.
