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Miners burnt by market plunge

The focus this afternoon will be on the Reserve Bank of Australia (RBA), which is expected to cut interest rates again.


At 1217 AEDT, the benchmark S&P/ASX200 index was down 101.6 points, or 2.76 per cent, at 3,579.6, while the broader All Ordinaries fell 99.7 points, or 2.67 per cent, to 3,519.3.

On the Sydney Futures Exchange, the December share price index contract was down 89 points at 3,592 on a volume of 19,375 contracts.

Burrell Stockbroking associate Peter Wright said the local market was performing poorly on the back of a weak performance from

Wall Street.

“I saw that figure (the Dow) this morning and I thought – Oh, no. Here we go again,” he said.

Mr Wright said the expected interest rate cut would do little to counter the falls on the local market.

“Markets do anticipate these things, and I think they\’ve priced in 75 basis points.

“If we get more there will probably be a sell off as people will interpret that as though we\’re in a lot more trouble than what we


“It is probably a lose-lose situation for the market in its current mindset.”

BHP Billiton shares fell $1.92, or 6.42 per cent, to $27.98, and Rio Tinto shares lost $2.70, or 6.32 per cent, to $40.00.

In the US on Monday, the panel at the National Bureau of Economic Research confirmed that the economy has been in recession since December 2007.

US stocks finished lower, with the Dow Jones industrial average settling down 679.95 points, or 7.7 per cent, at 8,149.09 points.

Mr Wright said the panel had essentially redefined what constituted a recession.

“At the end of the day you can debate the semantics of it but the traditional metric for defining a recession has not been achieved (two consecutive quarters of GDP contraction).

“I was a bit perplexed by the markets reaction to that but that\’s the times we live in – any kind of negative news is just seized upon.”

The banks were lower. Commonwealth Bank fell $1.02 to $31.98, National Australia Bank dropped 34 cents to $19.09, ANZ declined 24 cents to $14.14 and Westpac was down 37 cents at $16.57.

The major energy stocks also were in the red.

Australia\’s second biggest oil and gas producer, Woodside Petroleum, was down $2.27, or 6.27 per cent, at $33.93, Santos dropped 33 cents, or 2.29 per cent, to $14.06 and Oil Search sank 29 cents, or 6.24 per cent, to $4.36.

Fairfax Media fell 6.5 cents, or 4.56 per cent, to $1.36, News Corp lost 20 cents, or 1.65 per cent, to $11.90, while its non-voting scrip was down 34 cents at $11.41.

Grocery and liquor merchant Metcash has posted a 7.2 per cent fall in first half profit after recording a one-off cost related to the termination of a hedging position.

Metcash was steady at $4.00. Harvey Norman Holdings gained 10 cents to $2.25 after it reported that sales for the four weeks ended November 30 rose by 0.5 per cent, from the corresponding period last year.

Other major retailers were mixed. Woolworths lost 46 cents to $26.84, Wesfarmers fell 57 cents to $18.37, while upmarket retailer David Jones was up 13 cents at $2.70.

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