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The Australian sharemarket has closed flat.
The Australian sharemarket has closed flat.

The Australian sharemarket limped to a marginally softer close as US and Chinese growth uncertainty kept investors on the sidelines.

Wall Street was closed last night but following solid gains on European bourses the S&P/ASX 200 index gained 0.3 per cent in early trade, before slipping to close 1.1 points, or 0.02 per cent, at 5511.7 as consumer confidence fell to a five-year low.

The Shanghai composite index lost ground in morning trade on ongoing concerns the property market slowdown would hurt earnings, but it rallied into the black after lunch as stimulus hopes returned.

In Tokyo the Nikkei index was up 0.4 per cent as the yen remained under pressure, falling against 16 major currencies.

Last night European stocks rallied more than one per cent after European Central Bank president Mario Draghi sent out a “subtle” hint that euro interest rates would be cut next week, but failed to hint the ECB was edging closer to implementing quantitative easing.

He also warned of a “negative spiral to take hold between low inflation, falling inflation expectations and credit”, with lending conditions particularly tight for small businesses.

Royal Bank of Scotland currency strategy Greg Gibbs said Mr Draghi was “not exactly unequivocal” but made the case for some action while reserving the right to do more if required.

“The speech gives an argument on why the ECB is one of the most unresponsive central banks to inflation diverging below its target,” he said.

“Draghi sets out why most inflation shocks are self-correcting and that it is best to wait it out in case your monetary policy actions, operating with lags, only serve to amplify the reversal of temporary shocks.”

The Australian dollar rose US0.3¢ to US93.70¢ while government 10-year yields were little changed at 3.748 points as attention switched to US durable goods orders tonight for evidence the US economy was gathering momentum after the winter slowdown.

Dalian iron ore futures were up 0.3 per cent, gold dropped $US7 to $US1287 an ounce and copper rose 0.3 per cent to $US6945 a tonne.

The Australian share market has closed flat, with few local and offshore leads.

CMC Markets analyst Ric Spooner said volumes had been thin following public holidays in the US and UK overnight.

“Without a lead from the US markets it often leaves us in a vacuum, especially when there’s not much significant economic data out,” Mr Spooner said.

“There’s no real need for markets to change their outlook.”

Positive performances on European markets kept the local market in positive territory for most of the day.

Among the big miners, Rio Tinto was 26 cents higher at $61.21 after striking a deal with the African government of Guinea to push ahead with plans to develop a $US20 billion iron ore project.

Mining giant BHP Billiton was two cents lower at $37.89 while Fortescue Metals was up six cents at $4.62.

Financial services group Suncorp slumped two per cent to $13.42 after flagging $500 million in write-downs in its life insurance business.

The major banks were mixed, with Westpac up 16 cents at $34.32, ANZ down 12 cents to $33.55, National Australia Bank 23 cents lower at $33.29, and Commonwealth Bank 12 cents higher at $81.68.

Shares in foreign exchange transfer operator OzForex dropped almost 19 per cent to $2.65 as profit takers moved in after it announced a fall in full year net profit.

The broader All Ordinaries index was up 0.4 points, or 0.01 per cent, at 5490.8.

The June share price index futures contract was four points lower at 5520, with 12,326 contracts traded.

National turnover was 1.2 billion securities worth $2.4 billion.


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