The Australian sharemarket lost ground today as the tide turned in currency markets and risks assets continued to slide against the US dollar as global interbank and shadow bank funding conditions tightened ahead of a looming US debt default.
Equity bulls held the line as the S&P/ASX 200 index slipped just 5.9 points, or 0.11 per cent, to 5147.1 points, but falling metals prices signalled the mounting urgency to liquidate risk holdings as US politicians continued to bicker.
The Australian dollar fell 0.7¢ to US93.95¢, and hedge funds’ favourite speculative metals copper and gold both dropped.
Gold fell $US15 to $US1303 an ounce and copper fell 1.9 per cent to $US7100 a tonne as the global growth outlook continued to deteriorate from the protracted US government shutdown.
Australian government 10-year yields climbed 7.9 points to 4.165 per cent, just shy of the 18-month high at 4.20 per cent, with the mostly technical drop in the unemployment rate having little impact. US 10-years rose 4 points to 2.67 per cent.
The domestic unemployment rate fell 0.2 percentage points to 5.6 per cent in September after 9100 jobs were created and the participation rate fell 0.1 percentage points. The increase of jobs fell short of forecasts for a 15,000 increase.
The global bounce in equity markets on the announcement of Janet Yellen as the next US Federal Reserve chairman faded rapidly as the view began to spread that only a sharp market sell-off would force either Democrats or Republicans into a debt ceiling compromise.
Sentiment was also dampened by the Fed meeting minutes which indicated the majority of board members thought tapering of the $US85 billion a month bond purchasing program would begin this year, although Fed members noted the risks to the economy from the fiscal standoff.
US T-bill notes maturing on October 17, the date the US Treasury says it will run out of money, surged from 0.2775 per cent to 0.47 per cent, with less reaction further out in duration as markets expect any possible default to be short-lived.
In Tokyo the Nikkei index climbed 0.9 per cent at the close of the ASX while the Shanghai composite index was off 0.9 per cent.
Bell Direct equities analyst Julia Lee said the local bourse improved slightly after the release of firm jobs data, but it was not enough to push it into firm positive territory.
“The key driver at the moment is negotiations around the debt ceiling,” Ms Lee said.
“During the Asian session the US futures were up and that’s the key reason we’ve seen improved sentiment on the Australian market.”
The big miners were mixed, with BHP Billiton down 21 cents at $34.62, but Rio Tinto rose one cent to $60.21 and Fortescue Metals added 10 cents to $4.88.
Gold stocks suffered, with Newcrest Mining down 29 cents, or 2.65 per cent, to $10.64.
The major banks were mixed, with ANZ up 10 cents to $30.55, Westpac up three cents to $32.20, National Australia Bank was down nine cents at $34.17 and Commonwealth Bank fell 22 cents to $70.80.
Bank of Queensland gained 70 cents to $11.15 after lifting its full year cash profit to $251 million, due to a reduction in bad debts.
At the close on Thursday, the benchmark S&P/ASX200 index was 5.9 points, or 0.11 per cent, lower at 5147.1.
The broader All Ordinaries index was down 5.4 points, or 0.1 per cent, at 5146.2.
The December share price index futures contract was four points lower at 5136, with 18,680 contracts traded.
National turnover was 1.3 billion securities worth $3.4 billion.