The Australian sharemarket fell again after weak domestic and Chinese manufacturing data and the release of US GDP figures that smashed the bullish US growth theory and excuses about the country’s cold snap.
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 $US7 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.
Investors sold out of ANZ despite its record $3.5 billion half year profit and higher dividend, and that selling spread to its rivals, who have all enjoyed strong share price growth so far in 2014.
“ANZ unleashed a set of impressive numbers prior to market open and beat analyst expectations across the board,” CMC Markets sales trader Betty Lam said.
“This was not enough to impress a tough crowd, who for the most part had already bought the bank up to record highs earlier in the week.”
ANZ shares dropped 40 cents to $34.07, Westpac lost 42 cents to $34.70, National Australia Bank shed 59 cents to $34.71 and Commonwealth Bank was 26 cents lower at $78.64.
Mining stocks also dropped as the price of iron ore hit another low overnight. In the mining sector, BHP Billiton dropped 25 cents to $37.50, Rio Tinto shed 91 cents to $60.77 and Fortescue Metals was 20 cents lower at $4.85.
The release of manufacturing data from China, which showed a small increase in activity, failed to influence the local market, Ms Lam said.
Woolworths dropped 80 cents to $36.52, continuing its falls from the previous day fuelled by weaker than expected sales growth.
Wesfarmers, the owner of rival Coles, gained four cents to $42.75. Telstra lost two cents to $5.20.
The broader All Ordinaries index was down 40.4 points, or 0.74 per cent, at 5430.4 points.
On the ASX 24 at 2.21pm, the June share price index futures contract was 40 points lower at 5429 points, with 26,533 contracts traded.
National turnover was 1.8 billion securities worth $5.56 billion.