Strong trade and retail sales data failed to lift the Australian sharemarket as Chinese officials stoked uncertainty and the Ukrainian standoff grew increasingly frosty.
The S&P-ASX 200 index closed 0.3 points, or 0.01 per cent, easier at 5445.9 despite a 1.2 per cent jump in retail sales in January, three times the consensus forecast as the news also saw the Australian dollar spike higher.
The dollar jumped US0.5¢ to US90.30¢, before easing to US90.15¢, as the improved sales data prompted a reassessment of the rates outlook, but the subdued response was reflected in credit markets where government 10-year yields rose 4 points to 4.10 per cent.
The sales improvement was broad, but surprised economists suggested it could have been boosted by payment of the Government’s School children bonus and a shift in spending patterns.
The January trade surplus of $1.4 billion was the biggest since 2011 and well above the forecast of just $100 million.
“Exports and import volumes are on divergent trends at present,” Westpac economist Andrew Hanlan said.
“Exports are advancing as the mining investment boom pays dividends. Import volumes are declining, at a time of weak overall domestic demand, particularly business investment.”
The Shanghai composite index fell almost one per cent in early trade after Finance Minister Lou Jiwei said economic growth below the government’s 7.5 per cent target was acceptable.
However, it bounced to trade 0.1 per cent down at the close of the ASX as the yuan strengthened on hopes the central bank would allows the strengthening trend to resume.
In Tokyo the Nikkei index was up 1.8 per cent.
Overnight the US recovery outlook was muddied by a slump in the ISM services index to a four year low and the ADP private payroll report fell well short of forecasts, raising fears the important non-farm payroll number tomorrow could disappoint investors.
Sentiment held steady and the S&P 500 index closed flat as the cold weather was once again blamed, despite the strong ISM manufacturing report out last week knocking the weather thesis, and markets expect the US Federal Reserve to maintain the pace of its bond buying program.
"There are a few slight concerns, but overall sentiment has improved from what we saw earlier in the week,” IG market strategist Stan Shamu said.
The market was also held back by several other factors, he said.
Investors were waiting to see what the European Central Bank would do with interest rates, non-farm payroll data is to be released in the United States, and risks in the Chinese economy are still being considered.
Markets had also recently enjoyed a strong run upwards and there appeared to be no reason at the moment to push them higher, Mr Shamu said.
A 1.2 per cent rise in retail spending in January had been good for sentiment, but investors were now waiting to see if it could change the Reserve Bank of Australia’s stance on interest rates, he added.
The banks and major resources companies were relatively steady, while healthcare and telco stocks fells.
National Australia Bank was the worst of the banks, falling 19 cents to $34.85, while ANZ added five cents to $32.57, Westpac lifted eight cents to $34.31 and Commonwealth Bank picked up three cents to $75.55.
BHP Billiton shed 14 cents to $37.66, Rio Tinto dropped 23 cents to $64.58 and Fortescue Metals gained 12 cents to $5.41.
CSL dropped 88 cents to $71.24 and Ramsay Health Care shed 55 cents to $48.78, while Telstra was four cents lower at $5.06.
The broader All Ordinaries index was up 2.4 points, or 0.04 per cent, at 5459.7 points.
The March share price index futures contract was down 10 points at 5443 points, with 24,587 contracts traded.
National turnover was 2.1 billion securities worth $5.2 billion.