The Australian sharemarket tried hard to sustain two rallies but dropped back to close marginally lower as sagging global growth indicators weighed on sentiment.
Shrugging off the weak lead from Wall Street last night, the S&P/ASX opened in the black and rallied to a 0.4 per cent gain mid-session on the reduced domestic trade deficit, but it slipped back to close 7.9 points, or 0.15 per cent, down at 5317.
The Australian dollar fell US0.3¢ to US89.20¢ after the November trade deficit narrowed to $118 million from a downwardly revised $350 million as imports fell 0.5 per cent and exports rose 0.3 per cent.
Government 10-year yields dropped 4 points to 4.332 per cent.
Overnight US S&P 500 lost 0.2 per cent after the ISM services index fell to the lowest level since June, with the new orders component contracting for the first time in over four years. On the upside the employment component was positive, raising expectations for Friday’s key non-farm payroll report.
“Economic sentiment seems to be almost universally bullish now, but with a market primed for good data we see room for disappointment,” ANZ credit strategist Patrick Perret-Green said.
Westpac economist said the implied “uneven nature” of the US recovery dampened enthusiasm for risky assets and knocked global benchmark US 10-years yields 5 points to 2.95 per cent.
The Shanghai composite index recovered from the red to trade 0.2 per cent up at the close of the ASX. The easing of requirements for Shanghai’s new tree-trade area sparked a surge in stocks exposed to the region, offsetting concerns that another five initial public offering approvals would dampen broad demand for listed stocks.
In Tokyo the Nikkei index was off 0.8 per cent.
Gold was steady at $US1240 an ounce, copper flat at $US7340 a tonne and spot iron ore eased 0.1 per cent to $US134.80 a tonne yesterday.
Bell Direct equities analyst Julia Lee said the local market gave up earlier gains due to concerns about Chinese manufacturing.
"It’s been a disappointing performance on the Australian sharemarket,” she said.
"The biggest area that’s been impacted has been the miners after steep falls in London overnight, with the mining sector in London down 1.9 per cent on concerns about the numbers coming out of China.
"Investors are cautious about how economies in China and Asia generally are tracking."
All the growth areas of our market have been sold off, including energy, materials and industrials,” Ms Lee said.
Among the major miners BHP Billiton was down 35 cents, or 0.93 per cent, at $37.21, Rio Tinto had lost 1.75, or 2.6 per cent, to $66.00 and iron ore producer Fortescue Metals was 27 cents, or 4.7 per cent, worse at $5.44.
Westpac was four cents weaker at $32.08, ANZ was down 13 cents at $31.86, and National Australia Bank had fallen five cents to $34.50.
But Commonwealth Bank had added 12 cents to $77.72.
Wesfarmers climbed four cents to $43.67 while Woolworths fell four cents to $33.76.
The broader All Ordinaries index was down 8.9 points, or 0.17 per cent, at 5318.8.
The March share price index futures contract was down 19 points at 5285, with 18,508 contracts traded.
National turnover was 1.5 billion securities worth $3.1 billion.