Investors lose nerve

SH

S&P/ASX ALL ORDINARIES

SOURCE: BLOOMBERG

The Australian sharemarket lost its momentum as investors were spooked by gloomy economic news from Europe and China. The sell-off spread to strong sectors including the banks. Commodity prices have softened and the spot price of gold sank to $US1557 an ounce, its lowest since August. Gold stocks such as Newcrest Mining have lost 43% since a high in 2011.

The market fall – below the psychological 5000-point barrier – triggered a bounce in investor concern, Investment Trends’ March Investor Intention Index shows.

“Investors are not back to panic stations yet by any means, but they were feeling much more cautious in March,” says Investment Trends analyst Kristin Bjerregaard. “Investors expressed increased concern over last month’s volatility, Cyprus-Europe contagion and the safety of their superannuation.

“Low interest rates and market uncertainty are also prompting a large rebound in interest in investment property, with more planning to buy than sell, and by an increased ratio compared with February.”

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