The upbeat G20 finance ministers outlook and commitment to spend $US2 trillion over five years to support growth did little to inspire investors as Chinese credit market jitters almost ended the Australian sharemarket’s winning streak.
The S&P/ASX 200 index climbed 0.4 per cent to within one points of its near six-year high but dropped back to close 1.5 points, or 0.03 per cent, up at 5440.2 after Chinese stocks tumbled again.
Pouring cold water on the G20 statement, Melbourne Business School associate professor Mark Crosby said on the “difficult question of concrete action”, the statement was silent.
“If additional growth is possible, why haven’t policy makers been able to implement changes to achieve it,” he said.
The Shanghai composite index was off 2 per cent at the close of the ASX as property stocks dived on concerns major banks were curbing lending to the sector as part of the government’s rebalancing plans.
China’s Finance Minister Lou Jiwei downplayed yuan declines and the risks from shadow banking, but his soothing were not convincing coming hot on the feels of the release of the US Federal Reserve’s 2008 board meeting minutes which revealed Fed officials had little grasp of the systemic risks in the run-up to the GFC.
The dismissive attitude was reflected in metal prices as copper tumbled 1.4 per cent to $US7030 a tonne on concerns record Chinese stockpiles related to financing deals could be dumped into the market if falling prices and a weaker yuan triggered cascading margin calls.
Gold was steady at $US1321 an ounce, spot iron ore lost 0.4 per cent to $US122.40 on Friday and futures on Shanghai steel rebar used in construction tumbled 2 per cent.
The Australian dollar was at $US89.70¢ and Government 10-year yields slipped 4.9 points to 4.171 per cent.
In Tokyo the Nikkei index also reversed an opening gain and was trading 1.3 per cent down at the close of the ASX.
The market had been doing reasonably well in early trade despite major companies such as Telstra, Wesfarmers and Woodside Petroleum trading ex-dividend, IG market strategist Evan Lucas said.
But that momentum was lost in afternoon trading, after data was released showing a slump in China’s housing price index, he said.
The data drove down the Chinese share market and caused a reversal in direction among local iron ore suppliers such as BHP Billiton, Rio Tinto and Fortescue Metals.
"The Australian market as a whole has been dragged down by the China story, because there is also talk about possible more lending tightening and lending issues over in China,” Mr Lucas said.
"That, unfortunately, put a real dampener on the day."
BHP added 21 cents to $39.38, Rio Tinto dropped 68 cents to $69.55 and Fortescue Metals shed three cents to $5.99.
The banks were also mixed, with NAB losing 11 cents to $34.43, while CBA edged 18 cents higher to $75.36, ANZ added 18 to $32.00 and Westpac gained 26 cents to $33.57.
BlueScope Steel gained 43 cents to $6.30 after it returned to profitability thanks to improved performances from its North American, Asian and Australian businesses.
Oil refiner Caltex Australia gained 45 cents to $20.94 despite suffering a 28 per cent slide in its full year profit, partly due to the impact of the fall in the Australian dollar.
Mining services firm Boart Longyear dropped 6.5 cents, or 15.3 per cent, to 36 cents after it fell to a full year loss of $US620 million.
The broader All Ordinaries index was up 0.7 points, or 0.01 per cent, at 5450.1 points.
The March share price index futures contract was seven points higher at 5422 points, with 22,821 contracts traded.
National turnover was 1.7 billion securities worth $4.9 billion.