Global markets reflected a brave front to mounting US Federal Reserve tapering risks but the Australian sharemarket fell deep into the red as QBE and the major banks were dumped.
The S&P/ASX 200 index opened in the black following the sharp rally in the US on Friday, but it soon dropped into the red and closed 41.6 points, or 0.8 per cent, down at 5144.4 points as the year long bank rally ran out of steam.
Stronger than expected Chinese trade data over the weekend offered some support to miners, but the 12 per cent surge in exports had some questioning whether the data was again being distorted by exporters shifting capital offshore.
The better than expected US jobs data on Friday was taken as positive across most equity and currency markets on the expectation growth would offset any negative’s from a reduction the Fed’s $US85 billion a month bond purchasing program.
The “Goldilocks” view is that the Fed will not taper next week ahead of the hand over of chairmanship from Ben Bernanke to Janet Yellen in January, and since there is no February meeting, it would take until March before the Fed would act.
National Australia Bank currency strategist Emma Lawson said with the Fed having made it clear that “tapering is not tightening” and the reality of better growth figures, the prospect of tapering was a little less intimidating for the usual “dovish” Fed board members.
“The fly in the ointment may well be the upcoming resumption of US budget negotiations, but until then, the mood may remain positive,” she said.
The Australian dollar rallied US0.6¢ to US91.10¢ as the US dollar lost ground against most major currencies and the Chinese data boosted Chinese growth hopes.
Australian government 10-year yields fell 6 points to 4.371 per cent as a 0.8 per cent fall in the ANZ job ads index underscored the weakening domestic growth outlook.
The Shanghai composite index was off 0.1 per cent at the close of the ASX as money market rates fell on expectations the stronger yuan would continue to strengthen, prompting capital inflows.
In Tokyo the Nikkei index jumped 1.9 per cent as the yen fell against the US dollar.
Gold was little changed at $US1230 an ounce, while copper pared Friday’s 0.7 per cent rally, sliding 0.3 per cent to $US7090 a tonne and on Friday spot iron ore eased 0.2 per cent to $US139.20 a tonne.
QBE shares fell more than 22 per cent after the company said it expects to post a $250 million loss for calendar 2013 because of weakness in the North American market.
Other insurers also fell, as did the big four banks.
Australian Stock Report analyst Benny Sada said investors were continuing to book profits, with valuations of the big four banks appearing stretched.
"Our market has underperformed its international peers as it has done over the past week,” Mr Seda said.
"The banks are underperforming again, with some profit taking after a pretty strong run.
"QBE’s news has also damaged sentiment."
The market’s fall came despite a strong lead from Wall Street, which was boosted by a better than expected November jobs report.
QBE was the worst performing stock among the market’s top 200 companies, shedding $3.45, or 22.3 per cent, to $12.00.
AMP dropped 10 cents to $4.35, Insurance Australia Group lost six cents to $5.72, but Suncorp gained three cents to $12.50.
Among the banks, Westpac dropped 42 cents to $31.09, ANZ lost 24 cents to $30.75, Commonwealth Bank shed 27 cents to $74.90 and National Australia Bank closed 30 cents lower at $33.17.In the resources sector, BHP Billiton added two cents to $36.77 and Rio Tinto added 12 cents at $66.53.
The broader All Ordinaries index was down 37.6 points, or 0.73 per cent, at 5148.4.
The December share price index futures contract was 35 points lower at 5149, with 27,946 contracts traded.
National turnover was 1.7 billion securities worth $4.3 billion.