The Australian sharemarket traded in and out of the red but finished slightly firmer as Chinese credit market concerns fuelled weakness in the yuan and metals markets.
Last night the US S&P 500 index climbed 0.7 per cent after Russian President Vladimir Putin said he did not plan to annex eastern Ukraine, but the S&P/ASX lagged far behind, finishing 11 points, or 0.21 per cent, up at 5355.6.
The Shanghai composite index was off one per cent at the close of the ASX as the yuan fell to 6.20 against the US dollar, a level which analysts suggest could be the tipping point that would accelerate an unwinding of Chinese commodity funding deals.
In Tokyo the Nikkei index reversed a 0.3 per cent drop to gain 0.4 per cent, after Japan’s February trade deficit of $US7.9 billion was worse than forecast.
The Australian dollar climbed US0.3¢ to US91.15¢ as economists continue to swing to expecting rate hikes this year, but pricing in credit market reflected remained neutral.
“Despite the change in the RBA’s rhetoric and stronger leading indicators for the domestic economy, the market is clearly dubious that the economy produced 47,000 new jobs last month and does not think the RBA can hike rates this year,” ANZ interest rate strategist Tony Morriss said.
Government 10-year yields slipped 3.3 points to 4.05 per cent despite expectations the US Federal would further undermine support for lower global borrowing costs tomorrow by announcing a $US10 billion cut in its bond buying program to $US45 billion a month.
Gold was slightly easier at $US1358 an ounce and spot iron ore rose 0.8 per cent to $US110.50 a tonne yesterday.
Overnight copper reversed a 0.8 per cent rally to close marginally firmer and then slipped another 0.3 per cent to $US6460 a tonne in Asian trade.
In the US consumer price inflation of 0.1 per cent met forecasts but remains well below the Fed’s 2 per cent target, while new housing starts missed forecasts and remains in a downtrend since June last year when US bond and mortgage yields soared at the first hint of Fed tapering.
The Australian market had followed world markets higher, Lonsec senior client adviser Michael Heffernan said.
“Crimea seems like it has been put on the interchange bench as far as worldwide market worries are concerned,” he said.
“The important thing will be what the announcement of the Federal Reserve is.”
In the resources sector, BHP Billiton lost 21 cents to $35.86, Rio Tinto shed 49 cents to $61.36, but Fortescue Metals gained 11 cents to $4.99.
Among the big banks, National Australia Bank eased three cents to $34.51, Westpac rose 16 cents to $33.75, Commonwealth Bank gained 26 cents to $75.45, and ANZ added 17 cents to $32.43.
Retailer David Jones dipped one cent to $3.32 after announcing a five per cent fall in profit in the first half of its fiscal year.
Rival Myer nudged one cent higher to $2.66.
The broader All Ordinaries index was up 12.8 points, or 0.24 per cent, at 5,373.0 points.
The March share price index futures contract was up seven points at 5355 points, with 91,594 contracts traded.
National turnover was 1.76 billion securities worth $4.59 billion.