Investors began the week cautiously, ignoring climbing metals prices and instead selling out of energy stocks after a sharp drop in the oil price.
A small resurgence in bond proxies and mid-tier stocks wasn’t enough to offset the nervousness ahead of Wednesday’s meeting by Opec, as worries grow oil producing countries won’t be able to strike an agreement limiting production.
The benchmark S&P/ASX200 Index fell 0.8 per cent to 5464.4 points and the broader All Ordinaries fell 0.7 per cent to 5532.6 points.”At the moment, the impending Opec meeting is on top of the mind of investors,” said Gary Huxtable, client advisor at Atlantic Pacific Securities.”With Saudi Arabia communicating to the market that they were somewhat bullish about a pickup in demand throughout 2017, they have essentially prepared a market non-agreement decision,” he said.
Woodside, Santos and Oil Search all closed lower, with the materials index not far behind.
Neither a neat 3.5 per cent bump in the iron ore spot price nor the next surge in futures managed to materially lift resources giants BHP Billiton or Rio Tinto. They closed the day down 2.6 per cent and 1.2 per cent respectively, while pure iron ore play Fortescue enjoyed a 1 per cent lift.
Falls in the big banks also weighed on the market, with Commonwealth Bank of Australia, ANZ, Westpac and National Australia Bank all closing down more than 1 per cent.
The banks were trading at the top of their 12-month ranges, Mr Huxtable said, adding he expects the index to struggle to cement higher gains as traders scoop profits off the top of the bank’s as long-term yields ease.
In other equities news, Metcash shares bolted 4.3 per cent higher on Monday, after the distribution company released its earnings results for the first half of financial year 2016.
Investors were pleased with the 0.3 per cent lift in the group sales to $6.63 billion, supported by the inclusion of three-weeks worth of sales from the hardware business it acquired from rival Woolworths.
Shares in telecommunications retailer Vita Group plunged 17 per cent on Monday to $2.99, erasing the gains it made on Friday, when the company agreed to new commercial terms with Telstra. Vita Group currently manages 103 of Telstra’s retail stores, as well as some of its business centres.