Australian stocks suffered another reversal on Monday as initial gains evaporated to send the market to a fresh nine-and-a-half-month low, with doubts about the local economy adding to worries about a Greek debt default. The benchmark index closed below its March lows, signalling further weakness is likely with technical analysts targeting next support levels around 4,373.
Australian shares have lost 10.5 percent from their highs in April, with 10 percent being the usual definition of a correction, and are well below the 2009 closing level of 4,872. Shares in oil refiner Caltex slumped 6.9 percent to A$10.60 after it said refining margins have dropped sharply and its first-half profit would fall by up to 39 percent.
And Woodside Petroleum fell another 2.2 percent after Fitch ratings agency warned of increasing development risks for Australian LNG projects, such as its flagship Pluto development. The stock lost 4 percent on Friday. "The Australian economy is no longer seen as being totally resilient. There is a large chunk of the economy that is not going well and that is also weighing on the market, as well as this talk about rates (going up)," said David Spry, research manager at F.W. Holst.
Dealers said domestic institutions were not committing money ahead of the fiscal year-end on June 30 and confidence would remain fragile until a resolution of the Greek debt crisis. The benchmark S&P/ASX 200 index dropped 33.2 points or 0.7 percent to 4,451.7, having reached as high as 4,520 in morning trade. The close was decisively below the March low of 4,477, after four straight weeks of losses, and marked the lowest close since August 27. New Zealand's benchmark NZX 50 index lost 2.1 points to 3,467.5.
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