Market closes deep in the red
The Australian sharemarket resumed falling after data showed the domestic economy was struggling to carry the growth baton handed over from mining and Chinese services momentum was fading along with infrastructure spending in the world's second biggest economy.
Following a weak lead from Wall Street last night the S&P/ASX 200 index dropped 0.6 per cent at the open but selling accelerated as March retail sales missed forecasts, leaving the index 45.6 points, or 0.83 per cent, down at 5435.8, but off the day's lows.
Dashing hopes for resurgent consumer spending, retail sales rose just 0.1 per cent, well short of the 0.4 per cent forecast, while the AiG construction index slipped 0.3 points to 45.9 points.
Westpac economist Matthew Hassan noted that sales growth over the March-quarter was a solid 1.2 per cent, but it missed forecasts for a 1.6 per cent increase and the sales pattern showed a loss of momentum consistent with recent readings on consumer sentiment.
The Australian dollar rallied US0.5¢ to US93.40¢ on broad US dollar weakness, but government 10-year yields fell 3.8 points to 3.827 per cent as the data affirmed the Reserve Bank's neutral policy stance.
The Shanghai composite index was off 0.5 per cent at the close of the ASX after the HSBC China services PMI index dropped 0.5 points to 51.4 points and property developers fell on fears of house prices weakness.
In Tokyo the Nikkei index tumbled 2.6 per cent as the yen rallied against most major currencies.
Last night the US S&P 500 fell 0.9 per cent after the US trade deficit increased to $US40.4 billion and disappointing earnings reports from AIG and Twitter that knocked tech stocks and financials.
The OECD revised down its global growth forecast to 3.4 per cent for 2014, from its November forecast of 3.6 per cent, mostly from a cut in Chinese growth.
On the upside European Central Bank data showed easing credit conditions in the eurozone for the first time since 2007.
"The ECB will find this survey heartening and should support their view of a gradual recovery in the euro area," ANZ strategist Tom Kenny said. "The big question for the central bank: is will this recovery be sufficient enough to get inflation headed back to the price stability target?"
Gold was little changed at $US1311 an ounce, copper was flat at $US6715 a tonne and spot iron ore edged up 0.1 per cent to $US106 a tonne yesterday.
More to come…
