ASX closes slightly firmer after quiet day
The Australian sharemarket traded in and out of the red in quiet holiday trade before closing slightly firmer as mixed US data threatened the global search for yield and iron ore tumbled to a fresh five year low.
Following a 0.2 per cent gain on Wall Street last night the S&P/ASX 200 index rose 13.6 points, or 0.25 per cent, to 5394.4 following the highest GDP growth in the September-quarter in more than a decade.
However, the third revision of the GDP surged from 3.9 per cent to 5 per cent but almost two thirds of the increase was attributed to personal consumption expenditure, specifically "Obamacare" health insurance introduced last year.
Alhambra Investment Partners strategist Jeffrey Snider wrote in a report that with income flat and nominal spending stuck at "recession levels", the GDP increase came at the expense of the savings rate which fell from 5.7 per cent to 4.5 per cent.
"GDP treats all spending as roughly equal in terms of true growth when that is decidedly not the case," he said. "Government spending is the most egregious addition to the statistic, but perhaps only one step away is insurance, as in health insurance."
The gloss from the GDP data was further eroded by November durable goods orders which fell 0.7 per cent, well short of the forecast for a 3 per cent increase, with all components weak.
US 10-year bond yields jumped 10 points to 2.25 per cent and the US dollar rallied against global currencies.
The Australian dollar hit a fresh four-year low of US80.88¢ ahead of the data and was steady at US81.20¢ today. Government 10-year yields rose 5 points to 2.88 per cent.
Spot iron ore fell 1.6 per cent to $US66.80a tonne and Dalian iron ore futures were off per cent on Wednesday as demand for ore and steel dropped ahead of the Lunar New Year next month and the winter slowdown.
Brent crude oil bounced per cent to
The Shanghai composite index was down one per cent at the close of the ASX.
In Tokyo the Nikkei index bounced 1.1 per cent as the yen traded near seven-year lows, supporting exporters.
More to come…
