The Australian market has followed overseas leads into the red, leading to its first fall of 2012.
At noon, the ASX 200 was down 1.19% while the broader All Ordinaries was 1.12% lower.
According to IG Markets analyst Cameron Peacock issues out of Europe once again plagued market sentiment.
“Commercial banks held record overnight deposits, with the ECB highlighting a continuing unwillingness to lend to each other.”
Resource companies diverged, experiencing both the biggest losses and gains.
Bluescope Steel was 3.53% lower, while Bathurst Resources lost 3.85%.
Gold stocks however did well, with Alacer Gold Corp., the fastest-rising stock, up 2.34%. Kagara Limited rose 1.75% while Gunns gained 1.82%.
European bourses sank overnight while American markets closed virtually flat.
Services sector continues to struggle
Australia’s services sector continues to struggle, with the latest Performance of Service Index showing activity fell in December despite the Reserve Bank’s rate cuts.
The Index, prepared by the Australian Industry Group and Commonwealth Bank, rose 1.3 points in December, but remained in negative territory at 49.0 points, just below the 50-point mark that separates expansion from contraction.
While the professional services sub-sectors improved in December, with growth in finance and insurance and property and business services, AIG director of public policy Peter Burn said in a statement that consumers remained reluctant to spend.
“The somewhat stronger performance of business services sub-sectors contrasts with the ongoing weakness across most of the consumer-related sub-sectors,” he said.
“This points to continued wariness on the part of households, some of which reflects the lack of progress in resolving the European sovereign debt issues, together with softness in domestic house prices.”
Commonwealth Bank senior economist John Peters said there was little likely to change in the macro environment.
“The bad news is that this pattern of growth is likely to persist in 2012 – the Australian dollar is unlikely to substantially depreciate due to the ongoing high terms of trade, and there is no end in sight to Euroland’s chronic financial woes.”
Port of Melbourne faces two-day shutdown
Australia’s busiest port may face a 48-hour shutdown from a Maritime Union of Australia (MUA) strike followed by a lockout by Port of Melbourne employer DP World.
The MUA yesterday informed DP World of a 24-hour strike at the Port of Melbourne terminal, Swanson Dock West, one of two terminals into Victoria.
The company matched the threat, saying it would lock out the workers the following 24 hours.
DP World said the closure would affect around 16 ships transporting 20,000 containers for both import and export.
Its national director of operations Andrew Adam told the Australian Financial Review the company was trying to send a clear message that union claims are unacceptable in their current form.
The MUA is demanding a 15% increase in base salaries over three years for its 2000 members across all five of DP World’s terminals in Brisbane, Sydney, Fremantle, Melbourne and Adelaide.
Trade surplus narrows, misses forecasts
Australia’s trade surplus narrowed in November to $1.38 billion, down $30 million from the previous month.
The result missed economist forecasts for a near $2 billion surplus.
One million cars sold in 2011
The car industry reached its target of one million new vehicles sold last year, although numbers were down on the previous year.
Figures released from the Federal Chamber of Automotive Industries show that 18% of the 1,008,437 cars sold last year were Toyotas.
Toyota sales were down 2.7% however due to the natural disaster in its native Japan.
2011 was also the first year that the Holden Commodore was not the highest-selling car, beaten by the Mazda3.
Yahoo appoints PayPal boss as its new CEO
Internet giant Yahoo has finally moved to replace dumped chief executive Carol Bartz, poaching PayPal’s Scott Thompson and promising he will “identify the best approaches for the company and its shareholders” – including potentially selling some of the company’s assets.
“Scott brings to Yahoo a proven record of building on a solid foundation of existing assets and resources to reignite innovation and drive growth, precisely the formula we need at Yahoo,” chairman Roy Bostock said in a statement.
“His deep understanding of online businesses combined with his team-building and operational capabilities will restore the energy, focus, and momentum necessary to grow the core business and deliver increased value for our shareholders.”
Thompson ran PayPal, which is part of online auction giant eBay, for four years.
Bartz, his predecessor, spent three years in the top job at Yahoo but was controversially sacked in September last year.
She blasted the Yahoo board as the “worst in the country” after her dismissal, which she claimed was made over the telephone.