Australian shares ended at a three-week low as the death of North Korean leader Kim Jong Il brought more uncertainty to a market already riled by a slump in the share price of domestic retailers.
IG Markets analyst Stan Shamu said Kim Jong Il’s death would further knock investor confidence at a time when the collapse in the retail sector and the eurozone debt crisis had already spooked buyers.
“Although a succession plan was already in place, change means uncertainty and uncertainty is not good for markets,” he said.
“The path of least resistance for riskier asset classes is certainly down.”
At the close on Monday, the benchmark S&P/ASX200 index was down 98.8 points, or 2.4 per cent, at 4060.4, its lowest point since November 28.
Only eight shares rose on the ASX 200.
The broader All Ordinaries index lost 104.9 points, or 2.5 per cent, to 4,113.9.
On the ASX 24, the March share price index futures contract was down 88 points at 4,046, with 41,037 contracts traded.
Embattled retailer Billabong plummeted 44.2 per cent, or $1.61, to $2.03 – a record low – after the surfwear retailer warned of a decline in first half earnings.
The downgrade follows profit warnings from other retailers, including JB Hi-Fi last week. Shares in the consumer discretionary sector ended down four per cent on Monday – the lowest point for the sector in 10 weeks.
JB Hi-Fi shares closed down 91 cents, or 7.16 per cent, at $11.80, Harvey Norman dropped 17 cents, or 8.7 per cent, to $1.785 and David Jones lost 25 cents, or 9.1 per cent, to $2.50.
Resources stocks were hit hard by further eurozone jitters after European Central Bank (ECB) president Mario Draghi again poured cold water on hopes that the central bank might ramp up its government bond purchases to help end the debt crisis.
IFR Markets global strategist Divyang Shah said the three-year loans offered instead by the ECB “should not be seen as a free lunch” and banks would have little stomach for carry trades funded by ECB liquidity.
“The ECB will remain the focus of politicians and markets in search of a backstop and a willingness to more forcefully use its balance sheet,” he said.
Locally, the energy sector ended 3.7 per cent lower, with Woodside Petroleum down 3.4 per cent, or $1.06, at $30.24 after it said it may need to delay a final investment decision on the Browse liquefied natural gas project in Western Australia by six months.
BHP Billiton was down 87 cents, or 2.5 per cent, at $34.32 and Rio Tinto fell $1.60, or 2.6 per cent, to $60.20.
The gold price finished the local session at $US1,589 per fine ounce, up $US2.84 from $US1,586.16 per fine ounce on Friday.
Financial stocks were weaker with the big four banks off by between 1.3 per cent and 2.2 per cent.
Former Commonwealth Bank chief Ralph Norris was quoted as saying the Australian Prudential Regulation Authority risked hurting lenders if it implemented new internationally based banking rules too aggressively.
There were 2.11 billion shares traded for $4.28 billion.
