ASX closes deep in the red
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 selloff.
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.
More to come…
