By Robb M. Stewart
MELBOURNE, Australia--Australia shares fell on Friday eroding
some gains for the week on the biggest decline in U.S. stocks in
five weeks and weakening commodity prices.
The S&P/ASX 200 lost 0.6% to finish at 5479.
The tone for markets across Asia was set after the Dow Jones
Industrial Average saw its biggest percentage drop since April 10
after the release of disappointing economic data in Europe and soft
earnings from Wal-Mart Stores.
"A concern in coming weeks will remain the resource space where
the challenges just continue to mount," IG market strategist Stan
Shamu said. "Iron-ore names in particular will be key for how this
market trades and any sign that China concerns are easing should
encourage a recovery."
Shares are vulnerable to a between 10% and 15% fall around the
middle of the year with worries about China, the risk of
earlier-than expected rate rises in the U.S. and the Ukraine crisis
all possible triggers, AMP Capital strategist and chief economist
Shane Oliver said. But, fundamentals for the market remain
favorable and AMP is holding to a year-end target for the ASX 200
of 5800.
Others are less bullish.
"The majority of what I read from our competitors both global
and local lately is either outright bullish or taking the glass
half-full view of either data or earnings outlook. This is the
complete opposite of two years ago and the complete opposite of
Bell Potter's approach where we have recently downgraded many
individual stock recommendations from Buy to Hold," Bell Potter
Securities executive director Charlie Aitken said.
There was further buying of bonds Friday suggesting investors
are switching out of equities, CMC Markets chief market strategist
Michael McCarthy said. The retreat from riskier investments may be
short-lived but it illustrates the dangers of trading near
post-global-financial-crisis highs.
Commonwealth Bank of Australia fell 1% after a strong run in
recent days that took its shares to a closing high Thursday. The
stock remains up 3.3% for the year. Australia & New Zealand
Banking, National Australia Bank and Westpac lost between 0.3% and
0.8% for the day.
BHP Billiton and Rio Tinto fell between 0.5% and 1.4% while
Fortescue Metals Group dropped 2.6%. Gold producer Newcrest Mining
lost 1%.
Shares in financial services firm IOOF rose 1.5% after it said
it was offering about 621 million Australian dollars (US$581
million) for SFA Australia. SFA's shares jumped 18%.
Write to Robb M. Stewart at robb.stewart@wsj.com