The Australian sharemarket struggled to gain traction but finished off the day’s low as weak European data and fears of a US Federal Reserve rate hike early next year dampened bullish sentiment.
The S&P/ASX 200 index fell 0.4 per cent in early trade but bounced to close just eight points, or 0.15 per cent, lower at 5510.9 as Chinese stocks pared early losses.
Markets were on the back-foot with the US S&P 500 sliding 0.5 per cent last night after Goldman Sachs strategists brought forward their Fed rate hike forecast to the March-quarter.
Global benchmark US 10-year yields shrugged off risks of higher rates, slipping 2 points to 2.61 per cent as economists continued to revise down their growth forecasts despite strong headline US jobs data last week.
“With no new news flow and fatigued investors, who are now waiting for more definitive signs that something will happen on the central bank front, there was a lot of drift overnight,” National Australia Bank currency strategist Emma Lawson said.
Following weak German factory orders data released on Friday German industrial production fell 1.8 per cent, far worse than the flat forecast.
The news underscored the sagging eurozone growth and earnings outlook reflected in European equity markets testing key support.
The Australian dollar rose US0.3¢ to US93.90¢ and government 10-years dropped 2.4 points to 3.566 per cent as the ANZ Roy Morgan consumer confidence index eased again and the NAB Business confidence index firmed.
The Shanghai composite index again rallied from the red to trade flat at the close of the ASX as investors fretted over the earnings outlook in light of relatively weak GDP growth targets and forecasts.
In Tokyo the Nikkei index was off 0.3 per cent.
Dalian iron ore futures were up 0.5 per cent following a 0.6 per cent drop in the spot price to $US95.90 a tonne yesterday. Copper was little changed at $US7100 a tonne and gold rose $US5 to $US1318 an ounce.
The Australian Stock Report’s senior equity analyst Benny Sada said the business survey had allayed fears about the domestic economy and provided a degree of support for the market.
"It was a very lacklustre day and coming up to the US and Australian earnings seasons trading activity is expected to be relatively subdued,” he told AAP.
"We need to see earnings to justify run-ups in the share price and there will be clear evidence of that in the next few weeks.
The banks and energy stocks had some of the biggest falls.
Woodside Petroleum lost 28 cents to $41.74 and Oil Search fell six cents to $9.70 while Santos was flat at $14.26.
Among the banks, ANZ lost 28 cents to $33.59, National Australia Bank dropped 14 cents to $33.59, Westpac was 12 cents lower at $34.22 and Commonwealth Bank gave up earlier gains to close four cents down at $81.32.
Making news, discount retailer The Reject Shop recovered to close 23 cents, or 2.4 per cent, higher at $9.81 after announcing the appointment of former Brewery boss Ross Sudano as its new chief executive.
The broader All Ordinaries index was down 7.8 points, or 0.14 per cent, at 5498.5.
The September share price index futures contract was six points lower at 5472, with 21,693 contracts traded.
National turnover was 1.4 billion securities worth $2.5 billion.