Stocks close in the red

Energy shares led the market down, with Santos diving 7pc, while Qantas closed more than 10pc lower.

The Australian sharemarket endured a red session for the first day in five on Monday, after a sell-off in the energy space and a plunge in the stock of aviation giant Qantas. Oil-exposed groups were shunned after negotiations between key oil producers failed to lead to a production freeze agreement, while the national carrier’s weaker guidance disturbed investors. The bearish developments led investors to seek out defensive sectors, with healthcare and telecommunications stocks among the beneficiaries of the flight to perceived safety.

At the close, the benchmark S&P/ASX200 index was down 14.8 points, or 0.40 per cent, at 5137.1, while the broader All Ordinaries index fell 12.7 points, or 0.37 per cent, at 5204.9.

The benchmark index had skidded 0.8 per cent at its low as crude prices weakened 6 per cent, but steadied along with the oil price as the session progressed.

Crude’s tumble followed a meeting of many of the world’s leading oil exporting nations in Doha over the weekend that was seen as a chance to flesh out a production freeze agreement. Negotiations collapsed, however, as heavyweight Saudi Arabia was unwilling to sign on without the inclusion of Iran, which has ruled out any curbs to its output growth.

Oil prices had been moving higher for several weeks ahead of the meeting, with hopes for a deal lending some support to the price despite analyst scepticism. The extent of its impact should become clearer over coming days as traders continue to analyse the outcome.

“If oil holds above support around $US35, it will be clear that price gains in recent months have been mainly about the outlook for lower non-OPEC production and a weaker US dollar,” CMC Markets chief market analyst Ric Spooner said.

“Reaction on tonight’s European and US markets will provide greater clarity on its impact on global sentiment.”

Local energy shares were unsurprisingly the laggards in the local session, given the oil price pain, with Santos diving 7 per cent to $3.88 and Origin stumbling 5.8 per cent to $4.71. Fellow energy sector behemoth Woodside performed significantly better, but still closed 1.4 per cent lower at $25.78.

Much of the broader resources sector was also weaker on fears of a flow-on effect to other commodities, with BHP Billiton sliding 3 per cent to $18.70 and Rio Tinto giving back 1.6 per cent to $47.45.

In aviation, Qantas stock plunged 10.8 per cent to $3.62 after the airline cut its capacity guidance in the wake of consumer jitters surrounding the federal election.

The national carrier has been a beneficiary of low oil prices over the last 18 months, but received no assistance from the latest leg down in oil given its own troubles.

Elsewhere, real estate group McGrath endured a rout as the recently-listed firm trimmed up to $5 million off its profit forecasts due to a slowing in the property market.

McGrath shares collapsed out of a trading halt, plunging 30.8 per cent to 89.7c per share. The firm had floated at $2.10 a share in December.

Major banks were not immune from selling pressure after the RBA’s Friday warning of shifting risks in the banking system due to an apartment glut. Sector sentiment was also dampened by broader concerns about the property sector as well as consumer confidence in light of the McGrath and Qantas updates.

ANZ slipped 0.63 per cent to $23.70, while CBA weakened 1.1 per cent to $74.18.

NAB yielded 0.78 per cent to $26.55, while Westpac retreated 1.5 per cent to $30.44.

In more positive action, telco giant Telstra climbed 1.7 per cent to $5.33 as investors eyed a dividend payout from the sale of China’s Autohome website.

Healthcare stocks were also higher as traders sought respite from the commodities sector sell-off.

CSL rose 1.8 per cent to $103.37, while Cochlear added 0.32 per cent to $105.09.