Offshore markets rallied last night on firm US GDP growth but the Australian sharemarket lagged with a marginal gain as Chinese and domestic growth uncertainty weighed on domestic sentiment.
The S&P/ASX 200 index ranged in and out of the red before closing 1.9 points, or 0.04 per cent, up at 5190 despite a 1.1 per cent bounce in the US S&P 500 index last night.
Demand for domestic focused stocks reversed the opening drop, but selling returned as emerging market jitters remained on the back-burner.
Bloomberg reported that investors withdrew $US7 billion from emerging market exchange traded funds in January, the fastest rate on record.
Overnight the US reported December-quarter GDP growth of 3.2 per cent, in line with forecasts, but weekly jobless claims jumped more than expected, December pending house sales slumped 8.7 per cent, personal consumption growth of 3.3 per cent missed forecasts and the Bloomberg consumer comfort index also declined.
The Nikkei index reversed an opening rally to a one per cent loss after December industrial production missed forecasts and household spending growth of 0.7 per cent fell well short of forecasts for a 1.1 per cent increase.
The data once again raised questions whether Prime Minister Shinzo Abe’s radical “Abenomics” policies would gain sustainable traction in the economy.
Chinese markets were closed for the Lunar New Year holiday.
The Australian dollar rallied US1¢ overnight to US88.30¢, but dropped back to US87.60¢ after December quarter producer inflation slumped to 0.2 per cent from 1.3 per cent, offsetting inflation fears from CPI data released last week.
“The PPI does not suggest any acceleration in underlying inflationary pressures and is consistent with the building theme that Australia’s current modest lift in inflation is associated with one off events boosting ongoing administrative price inflation,” Westpac economist Justin Smirk said.
The growth outlook was initially boosted by December private sector credit growth of 0.5 per cent that beat forecasts for a 0.4 per cent increase, an annual rate of 3.9 per cent, but the details revealed the bulk of credit was being utilised for housing speculation.
Personal credit remained “lacklustre”, increasing by 0.2 per cent for the month to be up by less than 1 per cent for the full year, while business credit slowed over the year from 1.9 per cent to 1.7 per cent.
IG market strategist Stan Shamu said economic data out of the United States overnight had been okay but not enough to really drive the local market.
He said investors were still wrestling with concerns over the stability of emerging markets like Turkey, Argentina, South Africa and India, and the latest tapering of US economic stimulus measures.
“This has caused a little bit of uncertainty in markets,” Mr Shamu said.
“Of course, we’ve got the China Lunar New Year break coming up, so activity is a bit low. “There’s no real risk-on or risk-off theme.”
The US economy grew at a 3.2 per cent annual rate in the final three months of 2013, a positive sign for the US economy in 2014.
Locally, BHP Billiton dropped 12 cents to $36.57, Rio Tinto fell 16 cents to $65.64, but Fortescue Metals added 10 cents to $5.33.
Origin Energy improved four cents to $13.98 after it lifted gas production by 28 per cent.
The major banks were mixed. National Australia Bank eased two cents to $33.25, Westpac dropped two cents to $30.87, Commonwealth Bank firmed three cents to $74.23, and ANZ picked up eight cents at $30.13.
In the retail sector, David Jones shares surged 12 cents to $2.99 after revealing it had recently been approached by rival Myer to consider a merger, which its board quickly rejected.
Myer lost four cents to $2.53.
Beverages supplier Coca-Cola Amatil was off 10 cents at $11.69, after the Federal Government’s rejection of its request for financial help to restructure its fruit processing business, SPC Ardmona.
The broader All Ordinaries index was up 5.7 points, or 0.11 per cent, at 5205.1 points.
The March share price index futures contract was five points higher at 5143 points, with 23,881 contracts traded.
National turnover was 1.99 billion securities worth $4.9 billion.