The Australian sharemarket finished a choppy session marginally in the red as weak domestic manufacturing data compounded the uncertainty from US Federal Reserve tapering and emerging markets.
The S&P/ASX 200 index opened 0.5 per cent down, rallied into black as the official Chinese PMI manufacturing index met expectations, but it dropped back to finish 2.1 points, or 0.04 per cent, off at 5187.9.
Investors are struggling to come to terms with the impact of reduced Fed liquidity which will be cut for the second time this month to $65 billion, with emerging markets and countries like Australia with current account deficits struggling the most.
On Friday the US S&P 500 index dropped 0.7 per cent, but finished well off the day’s low.
The Australian dollar was little changed at US87.50¢ after the AiG performance of manufacturing index dropped 0.9 points to 46.7 and building approvals fell 2.9 per cent in December, reversing an earlier surge.
Underscoring the lacklustre domestic growth outlook, State Street Global Advisors head of quantitative equities Olivia Engel wrote in a report total debt in Australian companies had risen over the past three years, but it “certainly isn’t going into capital expenditure”.
Instead much of the 14 per cent increase in borrowed money was being used to boost dividends payouts.
“Businesses aren’t particularly confident about the local economy and are looking for better indications that it is a good time to deploy investment into future growth,” she said.
In Tokyo the Nikkei index dropped 1.5 per cent while Chinese markets remained closed for the Lunar New year holiday.
Gold dipped to $US1239 an ounce before edging up to $US1244 an ounce and copper fell for the ninth day on Friday, losing 0.9 per cent to $US7065 a tonne. Shanghai spot iron ore last traded at $US122.60 a tonne on Thursday.
CommSec market analyst Steve Daghlian said volumes were light due to public holidays in China, Hong Kong, Taiwan, but the retail sector received a boost which kept a lid on losses.
“We heard from the likes of JB Hi-Fi which was one of the standouts as margins are improving,” Mr Daghlian said.
The result helped boost the retail sector, but volumes remained light ahead of the US non-farm payrolls results on Friday.
Investors are confident blue chip companies, including the banks, will deliver strong earning reports in February.
Electronics retailer JB Hi-Fi said its half year profit grew by more than 10 per cent to $90.3 million, due to stronger sales and improved margins. Its shares were up 55 cents at $18.55.
Country Road, a fashion group with operations in Australia, New Zealand and South Africa, posted a record half year profit, and said its annual profit would also grow.
But the big miners and some banking stocks weighed on the market.
BHP Billiton had dropped 13 cents at $36.44, Rio Tinto had fallen 30 cents at $65.34 and iron more miner Fortescue Metals had shed six cents to $5.27.
The major banks also were lower, with ANZ down 30 cents at $29.83, National Australia Bank down six cents at $33.19, but Westpac added 12 cents to $30.99 and Commonwealth Bank was up 17 cents at $74.40.
The broader All Ordinaries index was down 3.2 points, or 0.06 per cent, at 5,201.9.
The March share price index futures contract was four points lower at 5139, with 23,870 contracts traded.
National turnover was 1.4 billion securities worth $2.7 billion.