ASX closes lower as energy sector slumps

The Australian sharemarket fell further on Wednesday weighed by falling oil prices and a number of negative trading updates.

The S&P/ASX 200 Index closed the session 14.1 points, or 0.2 per cent, lower at 5829, declining for a fourth consecutive session.

The energy sector suffered another weak day as crude oil prices fell by 4 per cent prior to the open. It follows on from Tuesday's trading session which saw energy stocks fall after the government announced plans to regulate pricing within the sector.

BHP Billiton led the market losses on Wednesday, falling 2.2 per cent to $32.07, Origin Energy closed 3.4 per cent lower at $7.30, Woodside Petroleum slipped 1.3 per cent to $34.30, Santos fell 2.5 per cent to $6.76 and Oil Search closed trading at $7.98, down 2 per cent.

Bellamy's Australia fell after it announced full-year sales for its baby formula would be at the lower end of its guidance and first-half revenue would take a 15 per cent hit. Its shares closed 6 per cent lower at $7.98.

WorleyParsons shares slid 6.5 per cent to $15.81 after the company returned from a two-day trading halt. The company this week announced it would be acquiring Jacobs' energy, chemicals and resources for $4.6 billion.

Super Retail Group shares plummeted after the company's chief executive, Peter Birtles, announced he was retiring. The retailer's shares fell 10.9 per cent to $8.33.

CSL rebounded from four sessions in the red, advancing 0.5 per cent to $182.10. The healthcare giant led a broad advance in the sector, as Cochlear shares lifted 3 per cent to $178.44.

Ramsay Healthcare rose 1.8 per cent to $55.74, Sonic Healthcare closed 1.1 per cent higher at $23.60 and Sigma Healthcare finished the session at 56.5¢, up 2.7 per cent.

Major banks were also among the market leaders although their gains were only mild. Westpac closed 0.7 per cent higher at $26.50, ANZ rose 0.6 per cent to $25.45, Commonwealth Bank advanced 0.4 per cent to $66.86 and NAB closed trade at $25.16, down less-than half a per cent.

Brambles shares rebounded from a poor start to the week after management said that there was likely to be growth during the second half of the year.

Its shares were slightly weaker on Tuesday after it released a trading update which showed quarterly revenue growth was slow. Investors were more optimistic on Wednesday however, as its shares lifted 3.3 per cent to $10.74.

Gold miners had a good day on the market after the price of gold rose close to 1 per cent, prompted by a sell-off in global equity markets.

Newcrest Mining was among the market leaders rising 2.9 per cent to $21.30, Evolution Mining advanced 2.6 per cent to $3.17 and Northern Star Resources lifted 2.7 per cent to $9.43.

There were bigger gains for Saracen Mineral and Regis Resources, which rose 5 per cent to $2.52 and 5.5 per cent to $4.39, respectively.

Stock watch

The Reject Shop

Morgan Stanley has taken a knife to The Reject Shop's valuation, dropping its price target on the embattled retailer by 66 per cent following its 41 per cent profit downgrade. The broker downgraded the company to 'underweight' from 'equal-weight', revised its earnings per share for 2018-19 from 60¢ down to 36¢ and dropped its price target from $6.10 to $2.10. While the broker acknowledged that there had been progress on cost out and improving store footprint, it said it was difficult to see those initiatives stop the retailer's profit slump. The broker said it wasn't ruling out another profit downgrade following the key Christmas selling period and that, if the current conditions persisted, the risk for profitability to fall into the negative would increase. The broker's bear case sees the company's price fall to 50¢ in 12 months time.

What moved the market

Major currencies

Safe haven demand appears to be front of mind for many foreign exchange investors over the past month, with the Japanese yen lifting mildly against the US dollar since September 20. The yen's lift against the greenback has been mild, however, and there has been a broad weakness across all other major currencies. The Australian dollar has been one of the weakest currencies over the past month, second only to the Swiss franc which has fallen more than 3 per cent against greenback in the past five weeks. The British pound and euro have also been weaker during the same time period, weighed by the continued uncertainty surrounding Brexit negotiations, Theresa May's leadership and the Italian budget crisis.

Oil collapse

Crude oil prices collapsed on Tuesday as Saudi Arabia announced it would be able to meet any shortfalls in Iranian crude, as the Islamic Republic's supply dries up on the back of US sanctions. The Kingdom's energy minister Khalid Al-Falih said that Saudi Arabia and its allies are in a "produce as much as you can mode". The price of Brent crude fell by 4 per cent to $US76.31, hitting a six-week low, while WTI crude fell 4.2 per cent. Investors are also expecting inventories in the US to rise, with a Bloomberg survey suggesting there could be an increased of 3.7 million barrels, lifting from a 1.5 million barrel rise last week.

Colombian peso

The Colombian peso fell more than 1 per cent on Wednesday, past 3,100, a key support level for the currency. It hit a sessional low above 3,120 against the US dollar, a fresh low for 2018. The future of the Colombia's economic policy looks uncertain at the moment, with the country's finance minister, Alberto Carrasquilla, set to be summoned to the Congress of Colombia's Lower House on Wednesday, where he will discuss his connections to the so-called "water bonds" The country's currency is threatening to fall further and is within 80 pesos, or 2.6 per cent, of hitting a two-year low.

Share value

Shares are not as expensive as they may seem, according to AMP Capital's head of investment strategy and chief economist, Shane Oliver. While he does acknowledge that global shares are by no means cheap, they were not as expensive as some might believe. "The overall impression is that measured against their own history developed country share markets are not dirt cheap, but they haven't been for several years now and they are not at overvalued extremes," he said. "The main risk relates to the US share market, but other markets' valuations are reasonable."

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