ASX falls on weak overseas data
The Australian sharemarket fell again after weak domestic and Chinese manufacturing data and the release of US GDP data that smashed the bullish US growth thesis and cold weather related excuses.
The S&P/ASX 200 opened firmer after US stocks shrugged off the data and US Federal Reserve tapering last night to finish in the black, but domestic selling soon set in and the index dropped to close 40.3 points, or 0.73 per cent, at 5448.8.
US March-quarter GDP slumped to just 0.1 per cent from 4 per cent in the December-quarter, and the result was flattered by another surge in business inventories and the Obamacare health insurance spending ramp up that contributed one percentage point of total growth.
Markets ignored the data on expectations supported by the Fed's forecasts that growth would recover this quarter.
"There is no way that an economy "tantalizingly close" to escape velocity is so severely derailed by only snow," Alhambra Investment Partners strategist Jeffrey Snider wrote in a client report.
"Nearly every major economic segment declined or was at best flat. Of the only two economic pieces showing even minor growth, one (imports) is actually a negative reading on American consumers as they purchased fewer goods from overseas."
The Australian dollar was steady at US92.90¢ and government 10-year yields eased 1.6 points to 3.934 per cent after Australia's terms of trade edged higher in the March-quarter.
However, the AiG manufacturing PMI index tumbled 3.1 points to 44.8 points.
Chinese markets were closed for a public holiday but the official manufacturing PMI index missed forecasts but edged up 0.1 point to 50.4 points, barely above the contraction zone.
In Tokyo the Nikkei index was up 1.1 per cent.
Gold dropped 4US7 to $US1288 an ounce, copper fell 1.1 per cent to $US6642 a tonne and yesterday spot iron ore fell tumbled 2.7 per cent to $US105.40 a tonne, 0.5 per cent above its 18-month low.
More to come…
