The Australian sharemarket traded in and out of the red before finishing marginally firmer as markets paused to assess geopolitical risks and await key US inflation data tonight which could determine the direction of global borrowing costs.
Following the 0.2 per cent loss on the S&P 500 index last night the S&P/ASX 200 index opened 0.3 per cent down but rallied to close 3 points, or 0.06 per cent, up at 5543.3 as a bounce in the Conference Board’s China leading index lifted regional growth hopes.
The Shanghai composite index was up 0.9 per cent at the close of the ASX on expectations of more stimulus measures and the easing of property market restrictions in some countries.
In Tokyo the Nikkei index was up 0.9 per cent.
The Australian dollar climbed US0.3¢ to US93.90¢ after Reserve Bank governor Glenn Stevens flummoxed markets when he failed to “jawbone” the dollar lower in a speech in Sydney.
Australian government 10-year yields dropped 2.5 points to 3.368 per cent.
Bloomberg reported that Mitsubishi UFJ Asset Management chief fund investor Hideo Shimomura, who predicted 2014’s rally in Australian bonds, sees further gains pushing yields down to match US Treasuries over the next year or two as domestic growth momentum lags other developed nations.
Global benchmark US 10-years slipped one point to 2.45 per cent ahead of US CPI data tonight. Forecasts are for an annual rate of 2.1 per cent, but a bigger rise than forecast could prove decisive in encouraging markets to price in an earlier rise in US rates.
However, last night the Chicago Federal Reserve index missed forecasts, continuing the run of mixed data pointing to US GDP growth once again falling below optimistic forecasts in the 3 to 4 per cent range.
Dalian iron ore futures bounced 1.1 per cent following the 0.6 per cent drop in the spot price to $US96 a tonne yesterday.
Gold dropped $US10 to $US1306 an ounce but copper jumped one per cent to $US7060 a tonne.
OptionsXpress market analyst Ben Le Brun said local investors were also waiting for mining giant BHP Billiton’s June quarter production report to be released tomorrow.
Mr Le Brun said trading today had been generally lacklustre, with low volumes of shares traded and no consistent themes.
“Everyone’s just on the sidelines, playing the wait-and-see game,” he said.
He said the materials sector had supported the local bourse today as investors anticipated a generally good production report from BHP Billiton.
“That might be a driver (for the market tomorrow) and also the CPI (inflation) figures,” Mr Le Brun said.
US CPI figures are due out tonight, and local inflation figures are due tomorrow.
Mr Le Brun said developments in the shooting down of Malaysia Airlines flight MH17 were having little to no impact on the Australian market.
In the resources sector, preliminary closing figures showed that BHP Billiton rose 29 cents to $38.51, Rio Tinto gained 43 cents to $64.13, and Fortescue Metals firmed four cents to $4.61.
Australia’s largest gold miner Newcrest was off three cents at $11.43 as it prepared to fight a class action by shareholders hurt by a massive financial write-down in 2013.
Oil Search lifted four cents to $9.54 after the ramp-up of a massive liquefied natural gas project in Papua New Guinea fuelled a surge in the company’s quarterly revenue.
Among the major banks, the Commonwealth Bank was down 10 cents at $81.26, ANZ dipped two cents to $33.37, National Australia Bank eased five cents to $34.20, and Westpac added four cents to $33.94.
The broader All Ordinaries index was up 5.3 points, or 0.1 per cent, at 5534.0 points.
The September share price index futures contract at 2.27pm was down six points at 5494 points, with 17,136 contracts traded.
National turnover was 1.58 billion securities worth $3.06 billion.