The Australian sharemarket finished an indecisive session marginally lower as bullish momentum in global equity markets waned overnight on profit taking ahead of a “high risk” events starting next week.
The S&P/ASX 200 index lost 7.4 points, or 0.17 per cent, to 4376 points, but finished off the day’s lows as bargain hunting in financials and other large cap stocks pared losses.
Miners struggled as sharp rally in industrial and base metals overnight on Tuesday was offset by the ongoing plunge in iron ore and steel prices.
On Tuesday Shanghai spot iron ore fell $US2.90 to $US106.40 a tonne, while steel rebar futures lost another per cent today after initially opening in the black, amid reports that Chinese ore buyers were refusing to accept contracted shipments, forcing miners to dump them onto the spot market.
Gold edged back $US2 to $US1639 after hitting a three-month high of $US1641 and copper pared its overnight 2 per cent rally, slipping 0.5 per cent to $US7573 a tonne.
Japan’s trade also fanned global growth uncertainty after July exports slumped 8.1 per cent and imports increased less than forecast at 2.1 per cent. The Nikkei index pared a steeper fall to close 0.3 per cent down.
The Shanghai composite index was off 0.7 per cent at the close of the ASX.
“This is a market that is simply not backing its own country with a positive outlook view,” Patersons analyst Andrew Quinn said.
The Australian dollar fell to a low of $US1.0435, losing ground against all major currencies, with sentiment hit by BHP Billiton’s announcement that it was scrapping its Olympic Dam expansion.
Overnight on Tuesday the US S&P 500 reversed an opening rally to a near high for the year, closing 0.3 per cent down on growing doubts US Federal Reserve chairman Ben Bernanke would “guide” markets with a hint of looming quantitative easing at his annual Jackson Hole speech next week.
The surge in market darling Apple to a new high of $US674.88 and subsequent drop to a $US9 loss to $US656 also knocked upside momentum with its heavy weighting in US indices.
“In the US, the choice of many investors to take profit after a strong run higher signals that they are still nervous about the future of global growth,” Forex.com analyst Chris tedder said.
“Yet, this is not entirely surprising considering the enormity of the challenges facing policy makers, especially in Europe but also in the US and China.”
Eurozone markets remained in a state of calm as Germany appeared to make some concessions to easing Greece’s bailout conditions with its next disbursement being increased to 13.5 billion ($16 billion) euro from 11.5 billion euro because of falling Greek revenues.
There are mounting expectations the European Central Bank will finally deliver on its promise to buy bonds at its September 6 meeting, while the German constitutional court and Dutch elections on September 12 pose some risk for destabilisation if they hobble the eurozone project in any way.
ANZ analysts wrote in a report that the robust recovery in financial risk over capital preservation in recent weeks had yet to be validated by a strong economic recovery, and attention on PMI data starting tomorrow will give a good indication of the state of the global economy.
“The stabilisation of US housing means that debt deflation risks will continue to ease, favouring a tilt to real assets,” they said.
“With risk appetite surging above our ANZ lead indicators we would now fade equities for yield, although we would acquire equities on large dips.”
CMC Markets analyst David Land said it was strange to see energy and resource stocks under pressure as retail stocks posted gains.
“It was quite a mixed day,” Mr Land said. “Materials were under pressure for most of the day and energy stocks were weighed down.”
Some smaller retail stocks surprised the market with better than expected earnings results.
Market heavyweight BHP Billiton’s 34.8 per cent slump in full-year net profit was broadly better than expected, leading its shares to finish 11 cents or 0.33 per cent lower at $33.16.
Rio Tinto shares fell 31 cents, or 0.57 per cent, to $54.10.The major banks were mixed, with shares in the Commonwealth Bank falling 0.82 per cent or 46 cents to $55.34. ANZ was up 0.04 per cent to $24.96, while Westpac and National Australia Bank suffered losses.
Westpac fell 0.08 per cent to trade at $24.89, while NAB dropped 11 cents to $25.26.
In local equities news, shares in Seven West Media jumped 0.52 per cent to $1.49 following a net profit increase of 97.1 per cent to $226.9 million.
Woodside shares closed 3.3 per cent lower at $34.80 after the company’s first half profit fell slightly because of the costs of starting up its massive Pluto liquefied natural gas (LNG) project in WA.
In the retail sector, Reject Shop shares rose 8.1 per cent to $10.59 after the discount retailer posted a full year net profit of $21.92 million, up 35.6 per cent from the previous 12-month period to June 30.
Noni B Limited shares rose 10 per cent to 82 cents after the Women’s fashion retailer delivered a 10-fold increase in full year profits.National turnover was 1.59 billion shares, worth $4 billion, with 431 shares up, 489 down and 344 unchanged.
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