The Australian sharemarket traded in and out of the red and finished in the black after base metal prices jumped overnight, iron ore eked out a tentative gain and global borrowing costs tumbled.
Following the weak lead from Wall Street the S&P/ASX 200 index fell 0.5 per cent in early trade but bounced to close 14.3 points, or 0.26 per cent, up at 5510.8 after the overnight “collapse” in global bond yields heightened the attraction of dividend yields.
Australian government 10-year bond yields fell 6 points to a 10-month low of 3.748 per cent, German 10-year bunds tumbled 5 points to 1.37 per cent and global benchmark US 10-years fell 5 points to a seven-month low of 2.54 per cent as investors scrambled for yields after the Bank of England turned “dovish” on UK rates and European Central Bank officials stoked eurozone rate cut hopes.
Reuters reported that the European Central Bank was “preparing a package of policy options for its June meeting, including cuts for all interest rates and targeted measures aimed at boosting lending to small- and mid-sized firms”.
Bond markets ignored a 0.6 per cent jump in US producer inflation after US mortgage applications missed forecasts with an increase of just 3.6 per cent in April and eurozone industrial production that dropped 0.3 per cent in March as production in the “big 4 of Germany, France, Italy and Spain” slowed.
The Australian dollar eased US0.3¢ to US93.75¢.
The Shanghai composite index was off 0.7 per cent at the close of the ASX as property market concerns continued to weigh on sentiment and UBS analysts said it was time to start cutting Chinese company profit forecasts.
In Tokyo the Nikkei index was off 0.8 per cent after data showed the Japanese economy grew 5.9 per cent in the March-quarter, well ahead of forecasts of 4.3 per cent, denting hopes for further stimulus measures.
Gold rose $US to $US1303 an ounce, copper leapt 1.6 per cent to $US6920 a tonne, spot iron ore rose 0.5 per cent to $US103.50 a tonne yesterday and Dalian iron ore futures were flat today.
Two of the big four banks barely moved, and an inconsistent day for the big miners offset gains by smaller resources companies.
“That’s what’s keeping the market relatively mixed as well. If one of those sectors was firing, we would probably have had a fairly good day,” IG market strategist Stan Shamu said.
Commonwealth Bank hit another record, lifting 31 cents to $81.20.
Westpac added 28 cents to $34.48, ANZ edged five cents higher to $33.20, while National Australia Bank dropped one cent to $33.59.
Mining giant BHP Billiton fell four cents to $38.26, Rio Tinto added three cents to $62.81, and Fortescue Metals eased three cents to $4.70.
Alumina was a strong performer, adding 8.5 cents to $1.375, and Mount Gibson Iron gained 4.5 cents to 79 cents.
Grains marketer GrainCorp added seven cents to $9.00 despite reporting a 43 per cent fall in half year profit, partly due to drought.
Treasury Wine Estates advanced 11 cents to $4.11, despite rejecting the latest speculation about international alcohol companies being interested in buying its assets in the United States.
Shopping centre owner Westfield Group added three cents at $10.93 after sales in its Australian, New Zealand, American and British centres grew in the March quarter.
Mr Shamu said the next driver for the market would likely be economic news out of China.
“If something positive comes out of China in terms of stimulus or anything to that extent, then that would be good for markets,” he said.
The broader All Ordinaries index was up 14.3 points, or 0.26 per cent, at 5490.2 points.
National turnover was 1.42 billion securities worth $3.78 billion.