Friday November 16, 1:48 PM
Australian stocks finish lower but outlook firm
By Wendy Frew
sg.biz.yahoo.com
SYDNEY, Nov 16 (Reuters) - The Australian stock market finished the week on a low note as falling oil and metal prices and higher bond yields prompted selling among resources and banking issues.
However, the market's steady recovery since late September is not in jeopardy because it still remains relatively attractive compared with bonds and cash, according to analysts.
"While equity market valuations appear stretched against their own history, once an allowance is made for low inflation, low cash rates and low bond yields, equity market valuations are in fact cheap," said Shane Oliver, head of investment strategy at AMP Henderson Global Investors.
Australia's benchmark S&P/ASX 200 <.AXJO> finished 22.2 points or 0.7 percent lower at 3,322.5, but was 1.1 percent higher on the week.
Giant copper producer BHP Billiton was the most notable loser, sliding 7.3 percent to A$9.63. The stock rallied sharply earlier in the week on higher copper prices and expectations of production cuts around the world. But not only did the short-covering rally that boosted the entire LME complex reach its end, oil prices also came under heavy pressure as world oil producers faced a showdown over production.
"You have to regard BHP as an oil stock," said JP Morgan director of institutions Eric Gale. "It is sensitive enough that earnings would flatten out (because of a sharp fall in the price of oil)."
The resources sub-index <.AXJR>, which includes BHP, led the fall, finishing down 3.7 percent on the day. The energy sub-index |
