Miners were hammered today, knocking the Australian sharemarket deep into the red, as Chinese credit markets jitters were compounded by a sharp reversal in Chinese exports last month and escalating tensions in Ukraine.
The S&P/ASX 200 index fell 50.8 points, or 0.93 per cent, to 5411.5 with most of the negative sentiment contained to miners after metal prices extended Friday’s sharp falls following confirmation of China’s first onshore debt default.
The Peoples’ Bank of China added fuel to fire when it also cutting the yuan fixing rate by 0.18 per cent, triggering the biggest fall in the yuan since 2008.
Copper tumbled another 1.5 per cent, extending its loss to 5 per cent at a five-year low of $US6710 a tonne, after Chinese exports slumped 18.1 per cent, more than reversing the January surge.
Import growth was steady at 10 per cent, but there was a “very sharp reversal” in iron ore imports from January’s surprise surge.
Westpac senior economist Huw McKay said “exports hit a wall essentially across the board” as the trade balance slumped to a deficit of $US23 billion.
“That implies that the (yuan) depreciation seen through the month may have been in part a function of a dramatic turnaround in net real economy flows.
The Shanghai composite index was off 1.7 per cent at the close of the ASX.
In Tokyo the Nikkei index was off one per cent as the final December-quarter GDP measure of 0.7 showed the economy grew less than initial 0.9 per cent estimate, raising doubts about the effectiveness of the radical asset purchasing program.
The Australian dollar fell US1¢ from its Friday high to $US90.40¢, while government 10-year yields climbed 4 points to 4.207 per cent.
On Friday US bond yields jumped points to 2.7 per cent after US non-farm payrolls increased 175,000 well in excess of forecasts for 140,000, ensuring the US Federal Reserve was likely to continue with the wind down of its bond buying program.
Gold fell $US16 to $US1334 an ounce, steel rebar future tumbled 4 per cent and on Friday spot iron ore fell 2.5 per cent to $US114.20 a tonne.
CMC chief market strategist Michael McCarthy said the poor Chinese trade data and the country’s first corporate bond default led to steep falls in metals prices.
“Mining shares and the broader Australian market were dragged down with them,” he said.
“However, lower than usual volumes and the index holding above key chart support levels may mean the phenomenon is short lived.”
Still, healthcare, staples and industrial stocks were well supported. Iron-ore focused stocks suffered the biggest falls as its price dropped.
Fortescue Metals shares fell 50 cents, or 9.4 per cent, to $4.93, Arrium had shed 16 cents to $1.34 and Atlas Iron had dropped 10 cents to 93.25 cents.
BHP Billiton was $1.54 lower at $36.18 and Rio Tinto had lost $3.80 to $61.14.
Meanwhile, Leighton shares rose $2.37 to $23.09 after controlling shareholder Hochtief made a $1.15 billion conditional bid to increase its stake in the Australian construction group.
Among the major banks, National Australia Bank dipped nine cents to $34.65, ANZ had lost 27 cents to $32.31, Westpac had shed 13 cents to $33.77 and Commonwealth Bank was 25 cents lower at $75.75.
The broader All Ordinaries index was down 46.2 points, or 0.84 per cent, at 5,430.8.
The March share price index futures contract was 57 points lower at 5415, with 21,901 contracts traded.
National turnover was 1.4 billion securities worth $4.1 billion.