The Australian sharemarket rally faltered as metal prices and iron ore futures fell in China and investors searched for new catalysts to drive the market out of its six-month trading range.
The S&P/ASX 200 index closed 6.1 points, or 0.11 per cent, down at 5518.9 as Chinese stocks floundered and Dalian iron ore futures fell 1.8 per cent on concerns the Chinese government was committed to rebalancing the economy and consequently, slower growth.
Xinhua News Agency reported former central bank adviser Xia Bin, as saying that a long-term downturn in China’s property market is “certain.”
The Shanghai composite index was off 0.2 per cent at the close of the ASX while in Tokyo the Nikkei index was off 0.3 per cent.
Bullish global equity market sentiment faded on Friday after German factor orders fell a worse than forecast 1.7 per cent and Austria’s Erste Group Bank dived 14 per cent after taking hefty bad loan write-downs from its Hungarian subsidiary bank.
While equity markets and most economists remain bullish on the US growth recovery, others caution that the world’s biggest economy lacks solid momentum.
“Historically weak participation amongst young and prime-aged workers points to there still being a substantial degree of slack in the labour market,” Westpac economist Elliot Clarke said.
“This is also apparent in the prevalence of temporary and part-time workers, as well as continued weak real wages growth. Consumers therefore continue to rely on consumer credit to partly fund consumption, particularly for education and durable goods.”
The Australian dollar was little changed at US93.50 while government 10-year yields firmed one point to 3.597 per cent and US 10-years rose 2 points to 2.66 per cent.
Giving a lift to sagging domestic growth hopes the AiG performance of construction index jumped 5.1 points to 51.8 points.
Copper fell 1.3 per cent to $US7085 a tonne, gold lost $US8 to $US1313 an ounce and spot iron ore was flat at $US96.50 tonne on Friday.
The start of the US company reporting season and Australian and China economic data are expected to spur more activity later in the week.
IG’s chief market strategist Chris Weston said the subdued market reflected a lack of volatility and a slow grind higher.
Investors would continue chasing higher yielding stocks such as banks or investing elsewhere in currencies or bonds until volatility picked up, he said.
Making news, shares in travel company Wotif.com rose 24.6 per cent to $3.29 after global giant Expedia launched a $700 million takeover offer.
Poker machine maker Aristocrat has placed its shares in a halt while it carries out a capital raising to fund a $US1.28 billion acquisition of a US gaming group.
The shares rose three cents last week to $5.39.
Struggling clothing maker Pacific Brands chief executive John Pollaers quit amid a boardroom battle about how to revive the company’s fortunes.
The company’s shares rose one cent to 55 cents.
The big miners were mixed, with BHP Billiton up 10 cents to $37.67, Rio Tinto down 32 cents to $62.28 and Fortescue Metals losing 13 cents to $4.55.
Among the banks, ANZ added nine cents to $33.87, National Australia Bank closed flat at $33.73, Westpac was six cents lower at $34.34 and Commonwealth Bank was down 59 cents at $81.36.
The broader All Ordinaries index was down 5.5 points, or 0.1 per cent, at 5,506.3.
The September share price index futures contract was four points lower at 5478, with 13,784 contracts traded.
National turnover was 1.5 billion securities worth $2.7 billion.