The Australian sharemarket traded in and out of the red before closing slightly lower today as investors searched for fresh buying catalysts to offset the steady uptick in global borrowing costs.
Domestic stocks again shrugged off the weaker lead from Wall Street, with miners and the major banks helping spare the S&P/ASX 200 index a weaker finish as the earnings season continued to deliver mixed fortunes for stocks.
The benchmark index eased 5 points, or 0.1 per cent, to 5152.4 points.
Underscoring the lack of direction this week, the Australian dollar bounced 0.7¢ to US91.70¢ and gold jumped $US14 to $US1340 an ounce, while Australian government 10-year yields rose another 6 points to 3.912 per cent as US Federal Reserve tapering concerns filtered through credit markets.
Despite higher domestic yields Bloomberg reported foreign demand for domestic bonds was firming again and that one buyer, possibly and central bank, bought an entire offering of $700 million of the 2027 Government bond auctioned on July 31 as the dollar reached a three-year low.
In Tokyo the Nikkei index fell 2.2 per cent after Finance Minister Taro Aso said June-quarter growth had been solid and Prime Minister Shinzo Abe had not given instructions on lowering the corporate tax rate.
The Shanghai composite index was off 0.4 per cent at the close of the ASX.
Overnight forecast beating European GDP data failed to inspire a spurt of risk appetite, despite the broad recovery including Portugal.
Copper pared its 0.5 per cent rally last night with a 0.2 per cent drop to $US7300 a tonne, while spot iron ore rose 0.7 per cent to $US142.80 a tonne.
Reports suggest the surge in iron ore amid record export levels is not from natural demand for steel; instead it is because Chinese steel mills are using ore and finished steel as collateral to gain access to scarce bank financing.
Following the playback used with copper, analysts caution that the steel collateral has been rehypothecated, meaning it has been pledged to a multiple banks.
In a Westpac and BREE report, senior economist Huw McKay said there was mounting evidence that the current phase of commodity price cycle was coming to an end.
“Global supplies have caught up with the rapid demand growth of the past decade,” he said. “Most markets now face surplus supply, with a number of commodity producers around the world now facing prospective losses.”
The broader All Ordinaries index was down 4.3 points, or 0.08 per cent, at 5136.7.
On the ASX 24, the September share price index futures contract was 13 points lower at 5107 with 19,893 contracts traded.
Stocks in health care and retail companies were the worst performers.
The market opened lower after a weak lead from Wall Street, and never recovered despite several major companies reporting higher profits.
Commsec market analyst Steve Daghlian said major global markets had performed well in recent weeks, leaving little room to move higher in the absence of significant economic data.
"Aussie shares have improved seven out of the past eight weeks, European stocks are up five days running, Asian markets are having their longest run of market gains in six weeks,” he told AAP.
The largest company to report its results today was Coles and Bunnings owner Wesfarmers, which made a $2.26 billion profit in the 2012/13 financial year, up six per cent on the previous year.
But that was weaker growth than expected, and its shares dropped 67 cents, or 1.6 per cent, to $41.26.
Rival supermarket owner Woolworths fell 34 cents to $33.27.
Financial services group AMP posted a smaller than expected fall in its underlying profit, and its shares gained 16 cents, or 3.5 per cent, to $4.70.
Blood products and vaccine provider CSL, another market heavyweight, fell heavily for a second consecutive day, dropping $2.21, or 3.4 per cent, to $63.58.
National turnover was 1.8 billion securities worth $5.7 billion.