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Markets fall 2% off the back of weak US jobs data and eurozone uncertainty: Afternoon market insights

The Australian market fell solidly today after negative leads from the US over the weekend. Weak job figures in the US and political uncertainty in Europe led to falls all around the world’s financial markets. The S&P/ASX200 fell heavily straight after opening on the election news overnight in Europe, then gradually fell further for the rest of the day. All industry sectors fell, with the biggest declines recorded by the resources, metals and mining, materials, and energy sectors – falling more than 3%.

The S&P/ASX200 was down 2.07% to 4305.20. The All Ordinaries Index was also down 2.10% to 4365.10.

The Australian budget will be handed down tomorrow with investors unsure how much government spending will be cut to reach a promised surplus. Miners are worried their government fuel subsidy will be cut. Miners were punished today.

“The resource stocks have been belted today, with steep falls in the big miners and energy stocks. BHP Billiton, Rio Tinto and Fortescue Metals are down 3.5%-5%,” Stan Shamu market strategist, IG Markets in Melbourne told LeadingCompany.

“Along with Europe issues and growth concerns, the budget will be in focus this week and is likely to keep some investors at bay. We might see caution being exercised as fears grow over the level of cuts that the Government is proposing.”

The day’s winners

Cabcharge (ASX: CAB) rose 3.53% to $6.45 at 2.40pm. Cabcharge was established by the taxi industry in 1976 to provide a national alternative payment system to cash to improve convenience and security for passengers and drivers. The electronic payment system is now found in 97% of Australian taxis as well as limousines and water taxis. Cabcharge’s share price has gained more than 42.2% since the start of February. On February 23 the company reported a 58.1% net profit (after tax) for the first half year of 2011. On January 25 it announced to the ASX it had received approval from the ACCC for the acquisition of Yellow Cabs Adelaide.

Energy World Corporation (ASX: EWC) was up 3.26% to $0.475 by 2.40pm. EWC is an energy company engaged in the production and sale of power and natural gas in Asia and Australia. It has seen big losses to its share price last month.

The day’s losers

Bathurst Resources (ASX: BTU) was down 9.38% to $0.58 at 2.45pm. Bathurst is developing a hard coking coal project in the Buller coalfield in the South Island of New Zealand – a region known globally for its low ash and high fluidity coking coal. The company recently won an environmental case in New Zealand’s environmental courts.

Onesteel (ASX: OST) fell 7.63% to $1.21 by 2.40pm. Onesteel is a steel maker who is in the process of diversifying into mining.

Sector movers

The sector with the smallest fall was the S&P/ASX 200 Utilities (Sector) index which was down only 0.29% to 4697.9 at 3.20pm.

The weakest sector was the S&P/ASX 200 Metals and Mining (Sector) which was down 3.54% to 3706.60.

Currency

The Australian dollar fell as risk in Europe increased. One Australian dollar was buying $US1.0137 at 3pm. At 12.00 AEST today the local unit was trading at 101.33 US cents, down from 102.64 at Friday's close – down 1.31 US cents.

Asian markets

Asian financial markets reacted badly to the news in Europe, recording their biggest falls since November and the euro weakened to a three-month low after French Socialist Francois Hollande was elected President, Greece is wrapped in political uncertainty and US employers added fewer jobs than forecast.

“Concerns about Europe’s debt are back and that will hurt global investors’ risk appetite,” Wu Kan, Shanghai-based fund manager at Dazhong Insurance, which oversees $285 million ($AU281 million) told Bloomberg.

Japan’s NIKKEI 225 was down 2.62%, or 245.72 points, to 9134.53 at 3.40pm AEST.

Hong Kong’s Hang Seng was down 2.74% or 578.78 points to 20507.20.

Shanghai SE Composite was down 0.3% at 11:45 am local time and South Korea’s Kospi index sank 1.7%.

“There’s been a lot of concern about what’s going on in the US, China, and recession in Europe and now we have more concern about Europe,” Vasu Menon, the vice president for wealth management at Singapore-based Oversea-Chinese Banking said on Bloomberg Television. The company oversees about $223 billion ($AU220 billion). “That’s going to hurt the markets.”

The euro fell 0.9% to 103.53 yen today, extending a 1.8% drop last week.

“There are major concerns about the euro,” Marito Ueda senior managing director in Tokyo at FX Prime, a currency margin company told Bloomberg. “What’s common to both Greek and French voting is that people aren’t feeling good about austerity measures, which are the crux to a resolution of Europe’s debt problems.”

Chris Weston Institutional Trader at IG Markets in Melbourne said with nearly all the votes counted in the Greek election the current coalition of Pasok and New Democracy (who approved the austerity program) have won 149 votes (seats in the parliament) – two short of forming a government.

“It seems logical they will ask the Democratic Left to join the pro-austerity club, which should make up the numbers but will probably come with caveats that may include changes to the EU/IMF austerity measures,” Weston said.

“Risk assets fell through the floor on the uncertainty, with continued fears of a global slowdown after last week’s manufacturing data.”

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