ASX closes flat as investors sit tight
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.
More to come…
