The Australian sharemarket finished the week in the red after Chinese trade data underscored warnings the world’s second biggest economy was enduring a “hard landing”.
The S&P/ASX 200 index was little changed in early trade but fell to close 31 points, or 0.72 per cent, down at 4277.3 points after China reported a sharp slowdown in exports that led to a $US10 billion slump in its July trade surplus to $US25 billion.Confirming the weak signals emanating from metals markets that global momentum was steadily slowing, Chinese export growth fell to just one per cent from 8 per cent in June, while imports increased 4.7 per cent compared to 7 per cent.
The Australian dollar fell 0.7¢ to $US1.0510 after the data was released, but was already under pressure after the Reserve Bank highlighted dollar strength as a headwind to domestic growth. Analysts noted the Reserve sounded “somewhat less confident of the strength of the resources boom”.
“The RBA certainly is wary of ongoing troubles in Europe, but appears sanguine over the outlook in China and Asia,” Royal Bank of Scotland currency strategist Greg Gibbs said.
“This may be one area where the market may see more downside risk than the RBA statement.
“Chinese economic data has significantly disappointed expectations this week. There is perhaps clearer evidence that China’s growth potential is waning and policy makers there may be wary of re-stimulating the economy too much,” Mr Gibbs said.
Providing some solace for iron ore miners, steel rebar futures bounced 0.8per cent today after spot iron ore eased $US0.1 to $US114.80 on Thursday.
However, copper extended overnight losses, falling another 1.1 per cent to $US7460 a tonne after the Chinese data, while gold eased $US6 to $US1611 an ounce.
Last night Wall Street closed little changed after the dip in weekly jobless claims and the $US4.8 billion drop in the US trade balance dealt further blows to hopes the US Federal Reserve would announce further stimulus measures next month.
Spanish and Italian bonds yields were little changed after the European Central Bank statement reiterated president Mario Draghi’s pledge to preserve the euro while also stating it was considering “unconventional” measures to contain the crisis.The broader All Ordinaries index was down 27.3 points, or 0.63 per cent, at 4,302.8. On the ASX 24, the September share price index futures contract was 36 points lower at 4,239 with 22,521 contracts traded.
“The market was sort of undecided in the early part of trading today. We had a mildly weaker lead from Wall Street but once the Chinese data came in, that really determined the fate of our index with a negative finish.”
Mr Waterer said investors were caught off guard by the trade balance figures, with expectations missing the mark by “quite a large margin”.
It sent traders heading more towards lower risk assets, he said.
However, Mr Waterer said that the market’s dampening could be short-lived as hopes grow that the Chinese central bank will act by loosening monetary policy.
“With the recent spate of Chinese economic weakness, it may bring forward the timeline on a Chinese interest rate cut.
“So that may actually serve to prop up the (local) market and limit any moves on the downside,” he said.
The resource giants closed lower on the trade figures, with BHP Billiton losing 11 cents to $32.69 and Rio Tinto shedding 41 cents to close at $56.45.
The major banks were the among the main underperformers, although ANZ was the sole gainer ending two cents higher at $23.84. National Australia Bank lost 24 cents at $25.18, Westpac lost 40 cents to $23.61 and Commonwealth Bank was the worst performer shedding $1.09 to end the week at $55.94.In local equities news, shares in property management and development company Goodman Group ended six cents higher to $3.86 after it said net profit had increased by 4.2 per cent in the year to June 30.
Casino operator Crown closed three cents higher to $8.56 after reporting a full year net profit growth of $513.3 million, up 53 per cent from last year.
In local economic news, the Reserve Bank of Australia upgraded its economic growth forecasts in its latest quarterly statement on monetary policy released today.The central bank expects annual gross domestic product to have expanded by 3.75 per cent in 2011/12, up from the 2.75 per cent it predicted three months ago. National turnover was 1.87 billion shares worth $3.93 billion with 469 stocks up, 434 down and 320 unchanged.
'The West Australian' is a trademark of West Australian Newspapers Limited 2013.
All rights reserved.
Select your state to see news for your area.