The Australian sharemarket again surrendered early gains to close marginally lower as weak domestic data, Chinese growth uncertainty and the narrowing US trade deficit prompted profit taking.
US stocks finished 0.6 per cent up last night but the S&P/ASX 200 index reversed 0.4 per cent gain to finish one point, or 0.02 per cent, easier at 5316, with miners again leading losses as Chinese stocks sagged.
Early optimism over US growth following the 15 per cent drop in the US trade deficit to $US34.3 billion in October was tempered by the fact that the boost to US December-quarter GDP paved the way for further tapering of the US Federal Reserve’s bond purchasing program.
“This has many analysts lifting their tracking estimates for 4th quarter GDP to around 3 per cent,” National Australia Bank global head of currency strategy Ray Attrill said.
Much of the deficit decline was because of plunging US energy imports from the explosion in shale gas production that kept emerging markets under pressure. The smaller deficit also meant the US is beginning to export fewer US dollars to support global growth, stoking jittery markets already fearful of the impact of soaring global borrowing costs.
Bloomberg reported that the US oil boom has put European refineries out of business and undercut West African crude suppliers, but they also threatened Asian markets and would challenge producers in the Middle East and South America.
The Australian dollar was steady at US89.30¢ and government 10-year bond yields dipped just 1.6 points to 4.30 per cent, despite another round of weak domestic data.
The AiG performance of construction index fell 4.4 points to 50.5 points, with expansion in housing construction negated by steep declines in engineering. Job vacancies fell 1.7 per cent in November.
The Shanghai composite index was up over 0.5 per cent in early trade but dropped back to a 0.4 per cent loss at the close of the ASX on growth concerns after the People’s Bank of China failed to seeks bids for short term liquidity.
Fears of diluted buying interest from a looming flood of initial public offerings continued to weigh on sentiment.
In Tokyo the Nikkei index bounced 1.4 per cent as the yen weakened against the US dollar.
Gold fell $US14 to $US1226 an ounce, copper was little changed at $US7335 a tonne and yesterday spot iron ore fell 0.7 per cent to $US133.80 a tonne.
Local investors appeared to be unimpressed by the brief return to confidence in Europe and the US, and instead focused on the vulnerabilities of local iron ore stocks, CMC Markets analyst Ric Spooner said.
"We’ve seen a bit of ongoing pressure in the iron ore sector and resource stocks generally,” Mr Spooner said.
"In the last couple of days, people are positioning a little bit for lacklustre or moderate growth in China."
He said some local investors believed the rallies in Europe and the US were specific to those economies.
"One of the features of this year might be that we might be dragged down by the relative underperformance of emerging markets,” he said.
Investors were also waiting for the release of a raft of overseas data later in the week.
Among the major resources houses global miner BHP Billiton was down 17 cents to $37.04, Rio Tinto had retreated 65 cents to $65.35, and iron ore producer Fortescue Metals had fallen five cents to $5.39.
The big four banks were also mainly lower, with Westpac down 17 cents to $32.04, ANZ was 15 cents off at $31.71, and National Australia Bank was 10 cents weaker at $34.40. But Commonwealth Bank rose 16 cents to $77.88.
The broader All Ordinaries index was down 0.1 point, at 5318.7.
The March share price index futures contract was down 11 points at 5284, with 15,447 contracts traded.
National turnover was two billion securities worth $3.4 billion.