Stocks sink on Brexit worries

The local market has given up Monday’s gains and more, as offshore jitters drive sentiment.

The Australian sharemarket has followed international bourses down on Tuesday, giving up yesterday’s gains after Brexit worries drove trans-Atlantic markets down on Monday night.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX 200 index was off 33.9 points, or 0.66 per cent, to 5103.3, while the broader All Ordinaries index lost 36.6 points, or 0.7 per cent, lower to 5179.6.

Despite Monday’s 0.5 per cent lift on the benchmark, IG market analyst Angus Nicholson said the Australian market had been hit “dramatically” by the fallout from the UK’s Brexit vote.

“The full consequences of the Brexit vote are still slowly playing out and consistent further selling in the market seems likely,” he said.

“If this selloff is anything like those of the previous 12 months then there’s a good chance the ASX200 ultimately pulls back to 4800.

“But 5000 is the most important level in the near term, and there seems to be plenty of global pessimism to push the index through it.”

The falls followed heavy hits to US and European markets overnight, the Dow Jones Industrial Average sinking 1.5 per cent helping to bring global market losses to $US3 trillion since the vote, according to Think Market’s Naeem Aslam.

“Uncertainty for the UK’s economy may continue for an extended period of time, and the spillover effects may be unstoppable,” he said.

However, futures for the Dow were pointing 0.64 per cent upwards just prior to the Australian sharemarket close.

That change in sentiment ensured the benchmark avoided the 5050-point depths it had reached in early morning trade.

Nevertheless, energy and materials still weighed, both retreating 1.4 per cent after US crude dipped nearly 3 per cent overnight.

In the energy space, Santos was the worst hit, with a 2.58 per cent decline to $4.54 ,while Origin Energy was close behind as it gave up 2.5 per cent to $5.45. Woodside Petroleum lost 0.27 per cent to $25.78.

The materials sector decline came despite resistance from the big miners, with Rio Tinto lifting 0.27 per cent to $44.20 and BHP Billiton off only 0.28 per cent to $18.03 as iron ore lifted 3.5 per cent ahead of the session. But gold miner Newcrest lost 2.65 per cent to $23.55 as the US futures improved, while mining explosives firm Incitec Pivot slumped 4.95 per cent to $2.88 and South32 gave up 3.11 per cent to $1.56.

The financial sector was the only one to close in the black, with the big banks reversing their early sharp losses to help the sector eke out a 0.14 per cent lift. Westpac and NAB lifted 0.49 per cent, to $28.52 and $24.63 respectively, while CBA added 0.4 per cent to $73.10 and ANZ ended largely flat.

In other trading, Wesfarmers lifted 0.38 per cent to $39.36 as it pared some of its losses from yesterday driven by concerns of its exposure to the UK via its recent hardware-store chain purchase, while supermarket peer Woolworths eased 0.24 per cent amid news former long-serving chief executive Roger Corbett would be abandoning his seven-month-old advisory role.

Elsewhere, Telstra sank 1.1 per cent to $5.41 and Qantas continued its recent bad run, plummeting 4.4 per cent to $2.61.

The Australian dollar meanwhile, lifted from US73.6c to around the US74c mark by the close of trade, in line with Monday’s level after briefly dipping on overnight greenback strength.

Looking ahead, the Housing Industry Association updates figures for new home sales tomorrow while gold and base metals miner Kidman Resources hosts its AGM.