ASX gives back yesterday's gains
The Australian sharemarket more than reversed yesterday's rally after retail sales missed forecasts, the Reserve Bank left interest rates on hold and Chinese data showed an underwhelming response to the country's "mini stimulus" program.
The S&P/ASX 200 index fell in early trade but rallied on positive net export data, before sliding to close 38.7 points, or 0.7 per cent, down at 5479.7 as US and Chinese data muddied the global growth outlook, knocking iron ore and steel prices.
Dalian iron ore futures fell one per cent, indicating falls in spot iron ore to fresh 20-month lows, after the HSBC China PMI index was revised down to 49.4 points from the 49.7 measured in the "flash" survey.
The Shanghai composite was up 0.3 per cent at the close of the ASX after the services PMI index rose 0.7 points to 55.5 points, boosting hopes for a rebalancing of growth.
In Tokyo the Nikkei index rose 0.8 per cent.
The Australian dollar climbed US0.3¢ to US92.70 after the Reserve "pointedly" commented that the slightly weaker currency was aiding growth, "but less so than previously as a result of the higher levels over the past few months".
A 1.4 per cent increase in net-exports in the March-quarter beat forecasts for 0.8 per cent and signalled a solid GDP result tomorrow, but the broader and more current retail sales economic indicator rose just 0.2 per cent in April, below forecasts for a 0.3 per cent increase.
"The slowdown in retail sales is consistent with the weakening in consumer sentiment early in the year," Westpac economist Mathew Hassan said.
"May's sharp fall in confidence suggests spending will be weaker still in the months ahead."
Australian government 10-year yields jumped 5.6 points to 3.727 per cent, tempering unease over the negative signals from low global bond yields, after benchmark US 10-years climbed points to 2.53 per cent last night.
Last night the release of incorrectly adjusted US ISM data stoked confusion after the leading index was first shown to have fallen, but the US S&P 500 rallied from the red to finish 0.1 per cent up at a record high after the index was revised higher.
The ISM data was countered by weaker than forecast 0.2 per cent increase in construction spending, while earlier German consumer inflation of just 0.6 per cent missed forecasts, underscored deflationary pressures in the eurozone and bolstered expectations for a rate cut from the European Central Bank on Thursday.
Gold was little changed at $US1245 an ounce, copper pared its 13 per cent overnight rally, sliding 0.6 per cent to $US6890 a tonne, steel rebar futures fell 0.9 per cent and spot iron was slightly firmer at US92.10 a tonne yesterday.
More to come…
