The Australian sharemarket tumbled deep into the red after iron ore threatened to crack key psychological support following weak Chinese property data.
The S&P/ASX 200 index was on the back foot the whole session as it fell through trend-line support to close 70 points, or 1.28 per cent, at the day’s low of 5409 on volume 20 per cent above average, with miners leading the sell-off.
Spot iron ore fell 2 per cent to $US100.70 a tonne on Friday, but signalling further weakness, Dalian iron ore futures initially fell 2.5 per cent today before halving early losses, after Chinese data showed new home prices increased in the fewest cities in 18-months and prices fell in eight of 70 cities.
“News late in the week that the rate of bad loans at major banks continued to rise in the first quarter added to market anxiety,” ANZ strategists said.
The Shanghai composite index was off 1.1 per cent per cent at the close of the ASX and struggling to hold above key psychological support at the 2000 point level.
In Tokyo the Nikkei index was off 0.5 per cent.
The Australian dollar shrugged off the negative sentiment as it held steady at US93.50¢, but government 10-year yields dropped another 2.7 points to a fresh 10-month low of 3.688 per cent despite the 3 point bounce in US 10-years to 2.52 per cent on Friday.
ANZ strategists said futures positioning data showed after two weeks of declines speculative longs in the dollar reached a 14-month high last week even as leveraged funds reduced shorts against the US dollar in the wake of rate cut expectations in the eurozone.
The pullback in US yields and tentative bounce in the S&P 500 soothed jitters, but strategists noted that Portuguese and Greek government bond yields continued to climb, indicating not all investors were convinced the credit market shakeout was over.
US data was mixes as housing starts surged 13.2 per cent, but economists cautioned it was a notoriously volatile number, while the University of Michigan consumer confidence index fell.
Gold rose $US2 to $US1296 an ounce and copper slipped climbed 0.7 per cent to $US6910 a tonne.
OptionsXpress market analyst Ben Le Brun said it had been a day to forget on the Australian share market.
"The materials space is out of sorts today, and that is probably testament to the fact that we’re looking at the possibility of an iron ore price under a $US100 a tonne for the first time since 2012,” Mr Le Brun said.
Mr Le Brun said the energy, industrial, banking and consumer discretionary sectors also had a bad day. Fears of deflating property prices in China may have pulled down general market sentiment.
"It’s a bit of an all-fall-down-story day, today,” Mr Le Brun said.
In the resources sector, global miner BHP Billiton declined 65 cents to $37.43, Rio Tinto dropped $1.85 to $60.10, and Fortescue Metals, which only produces iron ore, dumped 21 cents, or 4.59 per cent, at $4.37.
Among the major banks, Westpac lost 50 cents at $33.78, ANZ reversed 28 cents to $32.66, National Australia Bank slumped 54 cents at $32.95, and Commonwealth Bank sagged 84 cents to $79.56.
Among other stocks, engineering group Bradken plunged 30 cents, or 7.65 per cent, to $3.62 after it said it would cut more than 500 employees in the wake of the downturn in the mining industry, high costs and globalisation.
Construction giant Leighton shed 47 cents to $20.08 after its new head vowed to cut costs and recover outstanding payments as its parent company takes greater control of the company.
Paint maker DuluxGroup added three cents at $5.76 after it lifted its half year profit by 88 per cent.
Agribusiness Elders improved one cent to 12.5 cents after it narrowed its half year loss to $10.2 million.
The broader All Ordinaries index was down 68.6 points, or 1.26 per cent, at 5390.3 points.
The June share price index futures contract was 73 points lower at 5418 points, with 29,553 contracts traded.
National turnover was 1.43 billion securities worth $3.7 billion.