Spain woes dampen sentiment: Afternoon market insights

The Australian market fell today after negative leads from Europe and the United States overnight. The negative sentiment was driven by renewed sovereign debt worries in Europe led by Spain and Italy. In Greece, political instability and a new election slated for next month are threatening a bond deal put in place in March.

Australian resources, metals and mining and telecommunication services all declined, while the gold sector rose.

The S&P/ASX200 was down 0.97% to 4250.70. The All Ordinaries Index dropped 0.96% to 4331.60.

The day’s winners

Perseus Mining (ASX: PRU) was up 4.00% to $2.34 at 3pm. Perseus Mining is a gold explorer focused on underexplored gold belts in West Africa.

Evolution Mining (ASX: EVN) rose 2.06% to $1.73 at 3pm. The company owns and operates gold and silver mines in Queensland and Western Australia. It is developing a gold, silver and copper project in Queensland.

The day’s losers

Energy World Corporation (ASX: EWC) fell 5.88% to $0.64 by 3pm after a big fall yesterday. EWC produces and sells power and natural gas in Asia and Australia.

Australian-based oil and gas exploration and production company AWE (ASX: SGM) was down 5.88% to $1.76.

Sector movers

The strongest sector was the All Ordinaries Gold (Sub-Industry) which was up 0.43% to 5955.60.

The weakest sector was the S&P/ASX 200 Information Technology (Sector) index which was down 2.33% to 539.6 at 3.20pm.

Currency

One Australian dollar was buying $US1.0289 at 3.20pm.

Asian markets

Japan’s NIKKEI 225 was down 0.85%, or 81.27 points, to 9456.75 at 3.30pm. Hong Kong’s Hang Seng was also down 1.19% or 241.34 points to 20114.90.

Asian financial markets also followed negative leads from Europe and the US overnight. To put the size of the problem into context, the Spanish economy is bigger than Greece, Ireland and Portugal combined.

“Spain is in a very difficult situation and more likely than not to require some type of official intervention,” Stephen Halmarick, the Sydney-based head of investment markets research at Colonial First State Global Asset Management, told Bloomberg. “We are likely to have another very difficult day in the market.”

The MSCI Asia Pacific Index lost 0.9% by 1.05pm in Tokyo as Sony and Sharp posted losses totalling 900 billion yen ($AU10.5 billion).

Tonight Italy will try to sell 11 billion euros worth of bonds, with the market likely to watch on with interest.