The Australian sharemarket followed offshore markets lower today after iron ore prices tumbled and ABS data showed the economy lost jobs last month.
Following the 0.4 per cent loss on Wall Street last night the S&P/ASX 200 index dropped 25.2 points, or 0.46 per cent, to5428.8 but finished off the day’s lows on some bargain hunting.
The Australian economy shed 4800 jobs in May, while April’s increase of 14,200 was revised down to10.300, but the unemployment rate remained steady at 5.8 per cent as the participation rate declined to 64.6 per cent.
“The forward looking indicators continue to point to an on ongoing sound if rather lacklustre labour market,” Westpac economist Justin Smirk said.
“As such, within the month to month volatility of the survey an average again of around 10,000 to 15,000 per month is still the most likely outcome over the next few months.”
The Australian dollar hit an overnight high of US94.10¢ but dropped back to US93.70¢ as offshore sentiment soured.
European equities surrendered gains after earnings downgrades from German airliner Lufthansa and French pipe-making multinational Vallourec, while the cancellation of orders for 70 airbus aircraft worth $US5 billion by Emirates compounded the negative sentiment.
National Australia Bank global head of currency strategy Ray Attrill said the “risk-off” sentiment was driven by numerous factors, including the resurgence of al-Queda militants in Iraq and World Bank growth downgrades.
“Also worth noting is a sharp warning from the IMF, saying the world must act to contain risk of another devastating housing crash,” he said.
“It claims acceleration in global house prices from already high levels is a major threat to economic stability. The IMF cites prices as being well above historical averages for a majority of countries in relation to both incomes and rents, and that while the tools for containing housing market booms were still being developed, ‘this should not be excuse form inaction’.”
The Shanghai composite index was slightly weaker at the close of the ASX despite officials announcing new steps aimed at bolstering slowing economic growth by cutting taxes and expanding financing for exporters.
In Tokyo the Nikkei index lost 0.7 per cent.
Dalian iron ore futures tumbled 2 per cent today while spot iron ore eased to $US93.50 a tonne yesterday, while copper rose 0.2 per cent to $US6690 a tonne and gold slipped $US2 to $US1260 a tonne.
IG market analyst Chris Weston said there has been little reaction to the local jobs report. “Once the market priced in the falls in the S&P 500, the ASX200 traded in a narrow range,” Mr Weston said.
“There has been a strong reaction, however, in mining names with Fortescue falling over three per cent.”
The unemployment rate was steady at 5.8 per cent in May, as the total number of people with jobs fell 4,800 and the participation rate also slipped.
Mid-tier resources stocks were some of the worst performers, with Fortescue Metals 21 cents lower at $4.33,
Arrium was down 6.5 cents at 83 cents and BC Iron was 19 cents weaker at $3.32.
Shares in Mineral Resources were down 44 cents at $9.70 after it bought a 12.8 per cent stake in WA iron ore miner Aquila Resources, in a bid to be involved in the development of the West Pilbara Iron Ore Project.
Aquila shares were down seven cents at $3.54.
Mining giant BHP Billiton fell 23 cents to $35.71 and Rio Tinto was 68 cents weaker at $58.72. In the retail sector Flight Centre was down $1.67 at $44.76 after its profit downgrade on Wednesday.
The broader All Ordinaries index was down 24.6 points, or 0.45 per cent, at 5407.9.
The June share price index futures contract was 29 points lower at 5430, with 21,849 contracts traded.
National turnover was 1.3 billion securities worth $3.5 billion.