SYDNEY: The Australian stocks have closed the week deep in the red despite modest rebounds in iron ore and crude oil prices.
At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index was down 69.6 points, or 1.17 per cent, at 5877.9, while the broader All Ordinaries index fell 66.1 points, or 1.12 per cent, to 5851.5.
Friday’s steep decline caused the market to close substantially lower for the week, with the benchmark losing 90.5 points, or 1.52 per cent, over the five trading sessions to move further away from the key 6000 point threshold.
CMC Markets analyst Michael McCarthy said yesterday’s surprisingly strong employment figures, which showed the jobless rate fell to 6.1 per cent, had led to some portfolio selling by large institutions.
“A rejection of the 6000 level points to some portfolio selling,” Mr McCarthy said.
The Australian dollar’s rise gave institutional investors — who bought in at a lower exchange rate — an opportunity to lighten their portfolios, he said.
The currency surged to a three-week high in the wake of the jobs data, reaching the US78c mark for the first time since March 27, as markets reviewed expectations for the Reserve Bank to cut rates at its next board meeting.
By Friday afternoon, financial markets were pricing a 61 per cent chance of a May cut, down from a near certainty at the start of the month.
“If the Australian dollar got up to US85c it would be putting pressure on the RBA to cut, but the RBA takes a longer term view — there’s always some corrective moves in the currency in a downward trend,” Mr McCarthy said.
