Energy & Resources Slump Drags Australian Markets Down

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December 1st, 2014

Energy and mining stocks have continued to slump, weighing on the local bourse at noon, as a further fall in the global oil price sparks a mass offloading.

But stocks which benefit significantly from cheaper energy, such as airlines, transport and logisitcs companies, have seen strong demand, with Qantas trading above $2 for the first time in over three years.

At 12.05pm (AEDT), the benchmark S&P/ASX200 index was down 55.5 points, or 1.04 per cent, at 5,257.5, while the broader All Ordinaries index was down 57.7 points, or 1.09 per cent, at 5,240.4.

Locally energy stocks slumped, losing 5.65 per cent as a sector. 

Santos was 6.44 per cent lower at $9.45, while Woodside Petroleum gave up 5.22 per cent to $33.885.

Beach Energy slumped 6.83 per cent to 955c, while Oil Search fell 7.4 per cent to $7.38.

But falling energy prices are a boon for the airlines, and investors rushed to Qantas, as Citi raised their grading of the shares to "buy" against "neutral" earlier this morning.

Qantas soared 6.25 per cent to $2.04, its highest point since mid-2011, while Virgin Australia lifted 1.2 per cent to 42 cents.

Transport and logistics stocks are also aided by falling oil prices. Transurban shares gained 0.96 per cent to $8.39, while Sydney Airport rose 0.45 per cent to $4.46.

Gold stocks tumbled after Swiss voters have overwhelmingly rejected a proposal to require the central bank to hold a fifth of its reserves in gold. 

Kingsgate lost 8.93 per cent to 63.75c, while Newcrest lost 7.11 per cent to $9.605.

Materials were also thumped by investors, dropping 3.35 per cent as a sector.

BHP Billiton gave up 3.62 per cent to $29.80, while rival Rio Tinto shed 2.35 per cent to $57.71. 

Fortescue Metals slumped 5.61 per cent to $2.775.

Financial stocks were down 0.17 per cent.

ANZ added 0.03 per cent to $31.93, while Commonwealth Bank edged down 0.19 per cent to $80.57, after appointing Adam Bennett as its executive of business and private banking.

National Australia Bank shed 0.49 per cent to $32.44, while Westpac inched 0.03 per cent higher to $32.60. 

Healthcare was the only sector in the black, up 0.42 per cent, with Sigma Pharmaceutical rallying 2.04 per cent 75 cents.

In local economic news on Monday, the Australian Bureau of Statistics released business indicators for the September quarter, which showed company profits grew 0.5 per cent in the quarter, seasonally adjusted, compared with a 6.9 per cent fall in the September quarter.

The Australian Industry Group's performance of manufacturing (PMI) index for November showed expansion in the sector for the first time since July. 

The RP Data Core Logic Home Value Index showed home prices recording their first slowdown in six months.

The TD Securities-Melbourne Institute inflation gauge showed the price rises were slowing, up 0.1 per cent in November, after a 0.2 per cent rise in October, despite a falling Australian dollar.

The local market plummeted on Friday, suffering its largest fall in seven weeks as energy stocks were punished.

The sell-offs came after the 12-nation Organisation of Petroleum Exporting Countries (OPEC) maintained its collective output ceiling at 30 million barrels per day, where it has stood for three years, despite a glut which has sent oil prices plunging.

On Friday, the benchmark S&P/ASX200 index fell 87.9 points, or 1.63 per cent, to 5,313.

The broader All Ordinaries index was down 83.3 points, or 1.55 per cent, at 5,298.1