A rally on solid US jobs data was snuffed out by another weak round of Chinese manufacturing data, leaving the Australian sharemarket marginally firmer.
The S&P/ASX 200 index initially climbed 0.3 per cent, before falling back to a 0.3 per cent loss and closing 4.1 points, or 0.08 per cent, up at 5462.2 after China’s HSBC PMI index remained stuck in the contraction zone at 48.1 points.
The Australian dollar dropped US0.3¢ to 92.60¢ and government 10-year bond yields fell 5 points to 3.856 per cent after the domestic growth outlook was knocked by a slip in the AiG performance of services index further into the contraction zone at 48.6 points from 48.9 points.
Domestic bonds followed global benchmark US 10-years which dropped 3 points to 2.58 per cent despite data showing the US economy created 288,000 jobs in April and the US unemployment rate fell to 6.3 per cent, the lowest level since September 2008.
However, the US participation rate slumped to a 36 year low of 62.8 per cent as discouraged workers dropped out of the workforce and the raw data showed there were still 100,000 fewer jobs in the US economy than in January 2008.
“Markets remain unsure on a number of fronts: the strength of the US recovery and the Fed’s outlook, the risks from Ukraine, the lacklustre growth in the EU, China’s growing risks and the pace of the Japanese recovery,” National Australia Bank currency strategist Emma Lawson said.
“This is keeping volatility low and ranges tight; with a slight aversion bias.”
The Shanghai composite index resumed trading following a two-day break and was off 0.4 per cent at the close of the ASX.
The Chinese yuan strengthened after the People’ Bank of China marginally increased its mid-point reference rate, possibly in response to a weaker US dollar.
In Tokyo the Nikkei index was off 0.2 per cent as the yen rallied against most major currencies after Bank of Japan Governor Haruhiko Kuroda told CNBC the nation’s economic recovery was on track, damping expectations the BOJ will add to monetary stimulus.
Gold jumped $US22 to $US1307 an ounce and copper pared its 1.1 per cent rise on Friday as it dipped 0.3 per cent to $US6700 a tonne. On Friday spot iron ore rose 0.6 to $US106 a tonne.
IG’s market analyst Chris Weston said investors initially reacted cautiously to positive US jobs figures.
"The ASX 200 found sellers although there have been good gains in the materials space,” Mr Weston said.
"Westpac has taken some wind out of the market’s sails."
Shares in Westpac closed 42 cents lower after the bank revealed a record first half cash profit of $3.77 billion.
ANZ was 37 cents weaker at $33.97, Commonwealth Bank dropped 20 cents to $78.94, and National Australia Bank lost 36 cents to $34.20.
Bendigo and Adelaide Bank was in a trading halt after announcing that it would buy the Victorian government’s agribusiness lender Rural Finance Corporation for $1.78 billion.
It came after the US Labor Department said on Friday that non-farm payrolls surged 288,000 last month, the largest gain since January 2012.
Among local resources stocks, BHP Billiton added 22 cents to $37.49, Rio rose 67 cents to $61.65, and Fortescue Metals fell five cents to $4.86.Aquila Resources soared 89 cents, or 36 per cent, to $3.34 after rail operator Aurizon and Chinese steelmaker Baosteel Resources launched a $1.42 billion bid for the iron ore miner.
The broader All Ordinaries index was up 4.1 points, or 0.08 per cent, at 5462.2.
The June share price index futures contract was three points higher at 5450, with 16,316 contracts traded.
National turnover was 1.2 billion securities worth $3.1 billion.