AFTERNOON REPORT
(4.30pm AEDT)

After a tough September for investors, the local share market has started the trading month of October and the December quarter on a similarly dismal note. Losses from the US and Europe, weaker commodity prices and weakness in the Asian region impacted investor sentiment on Monday. Low volumes caused by a public holiday in NSW, the ACT and South Australia exacerbated the selling while there was no direction from China, with the Shanghai Composite closed all week. The All Ordinaries Index (XAO) fell 109.4pts or 2.7pct to 3960.7 while the S&P/ASX 200 Index (XJO) lost 111.6pts or 2.8pct to 3897.

Financial, mining and energy stocks all came under considerable pressure. In Europe on Friday night, banking stocks led the declines on ongoing concerns about the European debt crisis. Shares in Macquarie Group (MQG) today closed down 6.3pct to $21.44 while Westpac (WBC) was the worst out of the big four, down 4.1pct to $19.50.

In the energy space, Woodside Petroleum (WPL) dropped 2.7pct to $31.62 while mining giant Rio Tinto (RIO) dragged on the materials sector with a 4pct fall to $59.30. Iron ore miner Fortescue Metals Group (FMG) lost 7.5pct to $4.09.

Airline stocks also came under pressure. Virgin Australia (VBA) shares fell 3.1pct to $0.31 while Qantas (QAN) was down 2.5pct to $1.375.

There was some support for defensive healthcare stocks. Shares in CSL Limited (CSL) rose 1.2pct to $30.03 while Cochlear (COH) was firmer by 0.4pct to $46.59.

Shares in Sundance Resources (SDL) were placed in a trading halt, last at $0.43, after announcing it will update investors on a buyout offer from China's Sichuan Hanlong Group. Sundance has previously rebuffed Hanlong's $0.50 a share cash bid. Sichuan Hanlong already holds 18.6% of Sundance, which hopes to produce 35 million metric tons a year of iron ore from its Mbalam project on the border of Cameroon and the Republic of Congo. The trading halt on Sundance will be lifted before market open on Wednesday.

Markets around the Asian region also suffered today. South Korea was closed along with China, but Japan's Nikkei Index fell 2.4pct while Hong Kong's Hang Seng was down almost 5pct in late trade.

In economic data released today, the core measure of the TD Securities-Melbourne Institute monthly inflation gauge remained at seven-year lows in September. Excluding volatile items, the inflation gauge was up just 1.2pct on a year ago. The "headline" inflation gauge, affected by volatile items like petrol and fruit prices, also eased in September. The annual rate of prices eased from 2.9pct to 2.8pct in the month.

The Performance of Manufacturing index fell to a 27-month low of 42.3 in September, down by one point in the month. A reading below 50 indicates the manufacturing sector is contracting.

"Interest rates clearly won't be rising any time soon," wrote CommSec Chief Economist Craig James of the data. "The main interest is whether the Reserve Bank softens its upbeat rhetoric on the economy in its monetary policy decision tomorrow. Inflation is under control, giving the Reserve Bank confidence to at least leave rates unchanged, and even consider a rate cut should conditions deteriorate further abroad... (but) .. manufacturers continue to do it tough. Consumers aren't interested in physical goods, rather "experiences" like travel. In addition the currency remains historically high and the global economic environment is more uncertain."

The Australian dollar hit a 2011 low today, falling to US95.94c before recovering to finish the day's trade at US96.2c. It was also buying £0.6205 and €72.21c.

[Kick off your trading day with our newsletter]

On the market overall, a total of 1.13 billion shares were traded, worth $2.89 billion. 203 were up, 700 were down and 282 were unchanged.

At 4.15pm AEST on the ASX24, the futures contract was at 3894, down 106pts.

Ahead tonight, the ISM manufacturing index, auto sales and construction data are released in the US.

More from IBT Markets:
Follow us on Facebook.
Follow us on Twitter.
Subscribe to get this delivered to your inbox daily