The Australian sharemarket resumed falling today after data showed the domestic economy was struggling to carry the growth baton handed over from the mining investment boom.
Data on the Chinese services sector was also bearish, 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 figures missed forecasts, leaving the index 45.6 points, or 0.83 per cent, down at 5435.8, at the close.
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.
A global risk-off sentiment has spread from the US to Asia and Australia, Lonsec senior equities analyst Bill Keenan said.
"The mining sector has taken the biggest beating because the market has been a bit concerned about the Chinese slowdown,” he said.
"The US market has been let down by tech stocks. It’s a risk-off market led by the US. Hong Kong and Japan’s markets are also lower."
He said profit taking was also dragging down the value of Australian shares.
Among the big miners, BHP Billiton finished 49 cents lower at $37.17 and Rio Tinto dropped 90 cents to $60.60.
Fortescue Metals was 17 cents lower at $4.63.The major banks were also down with the Commonwealth Bank shedding 74 cents to $78.55, ANZ falling 31 cents to $33.77, Westpac 19 cents lower at $34.50, and National Australia Bank 27 cents lower to $33.82.
Construction materials companies were weaker, with Boral off 12 cents at $5.40, James Hardie down 52 cents at $13.58, and Fletcher Building was 26 cents lighter at $8.64.
April’s Australian Industry Group/Housing Industry Association performance of construction index fell 0.3 points to 45.9 in April, indicating a fourth straight month of contraction in the industry.
Among the better performers, outdoor clothing retailer Kathmandu jumped 26 cents to $3.77 after it said its third quarter sales grew by nearly four per cent due to colder weather in Australia and New Zealand.
The broader All Ordinaries index was down 43.6 points, or 0.8 per cent, at 5419.1.
The June share price index futures contract was 52 points lower at 5420, with 28,594 contracts traded.
National turnover was 1.39 billion securities worth $3.8 billion.