Afternoon market insights: mixed signals stall market

The Australian market fell slightly as mixed leads from the northern hemisphere overnight continued to impact throughout the day. The S&P/ASX200 rose before lunch then fell slowly all afternoon to finishing slightly down. The negative sentiment in world financial markets over the last few days was driven by renewed sovereign debt worries in Spain but tempered by a rise in US retail sales, a rise in Australian car sales and an RBA report saying only a bad inflation figure next week will prevent a rate cut.

“My feeling is that it’s still overall a bearish mood with regard to the euro,” Kara Ordway, a currency strategist at City Index Group in Sydney told Bloomberg. The Spanish debt auctions “will give us a first indication as to how currently people view Spain.”

All Australian industry sectors fell except the consumer discretionary, health care, and utilities sectors, which recorded a modest rise of less than half a per cent.

The S&P/ASX200 was up 1.39% to 4348.20. The All Ordinaries Index was up 1.31% to 4426.20.

The day’s winners

Energy Resources of Australia (ASX: ERA) was up 11.64% to $1.535 at 3pm. The rise today follows a similar rise of yesterday. Energy Resources is one of the largest uranium producers in the world. Its Ranger uranium mine is surrounded by Kakadu National Park in the Northern Territory, 230 km east of Darwin. Rio Tinto owns about 68% of ERA.

Lynas Corporation (ASX: LYC) was up 6.58 % to $1.167 at 3.15pm. Lynas is set to provide a new source of rare earths outside China when its due to come online in the second quarter of 2012. It has a mine at Mount Weld, Western Australia—the richest known rare earth deposit outside China.

The day’s losers

Linc Energy (ASX: LNC) Link’s share price was down 9.06% to 1.155 at 2.45pm. It had soared up by more than 37% yesterday soon after announcing it had formed a joint venture to produce gas in China. The Brisbane-based company produces underground coal gasification (UGC) and gas-to-liquids (GTL) technologies.

Mirabela Nickel (ASX: MBN) fell 7.34% to $0.505 by 3pm.

Sector movers

The strongest sector was the S&P/ASX 200 Health Care (Sector), which was up 0.56% to 8794.60.

The weakest sector was the All Ordinaries Gold (Sub-Industry) index, which was down 0.75% to 5855.0 at 3pm.

Currency

The Australian dollar fell against most of its 16 major comparable currencies today. One Australian dollar was buying $US1.0332 at 2.20pm.

Asia

Asian markets fell for a second day after foreign direct investment in China fell and the Euro declined ahead of Spain’s highly anticipated debt auctions. The MSCI Asia Pacific Index slipped 0.3% as of 1:55 p.m. in Tokyo.

Japan’s NIKKEI 225 was flat, down 0.01%, or 0.54 points, to 9470.10 at 3.20pm AEST.

Hong Kong’s Hang Seng was also down 0.58% or 119.66 points to 20491.00.

Exports dropped in March from the trading centre of Singapore as shipments of electronics slowed and petrochemical sales fell with a fall in demand from China.

“Being an externally driven economy, we expect Singapore’s activity indicators to begin reflecting the trend in global lead indicators, which have shown flattening momentum lately,” Vincent Conti, a Singapore-based analyst at Australia & New Zealand Banking Group told Bloomberg. “However, we see this as a momentary consolidation of overall growth rather than a slowdown, with a strong pickup likely to happen particularly in the second half of the year.”

Spain will again go to the market with auctions of more of its debt this week. The bond sales will be for 10 year and two year bonds. The whole financial world will be watching.