ASX closes flat on weak China data
A bullish heavy volume surge on the Australian sharemarket was snuffed out today after the Chinese flash manufacturing PMI index tumbled by the most on record.
Following a 0.3 per cent gain on Wall Street last night, the S&P/ASX 200 index climbed 0.7 per cent in early traded but it dropped back to close 4.3 points, or 0.08 per cent, up at 5638.9 as the Chinese data became the first reflection of the plunge in lending in July.
Overnight US stocks stumbled after the US Federal Reserve board meeting minutes showed a marked shift to a "hawkish", higher interest rate stance.
The HSBC China PMI index fell 1.4 points to a three month low of 50.3 points as disinflationary pressures returned.
"Today's data suggest that the economic recovery is still continuing but its momentum has slowed again," HSBC economist Hongbin Qu said. "Therefore, industrial demand and investment activity growth will likely stay on a relatively subdued path."
The Shanghai composite index was off one per cent at the close of the ASX.
In Tokyo the Nikkei index was up 0.8 per cent after a surge in the US dollar against major currencies knocked the yen and supported Japanese exporters, while Japan's PMI index climbed 0.9 points to 52.4.
The Australian dollar dropped US0.3¢ to US92.50¢ but government 10-year yields jumped 7.5 points to 3.502 per cent following a 3 point rise in global benchmark US 10-years to 2.43 per cent on the Fed minutes.
"While discussion around the table at the (Fed) FOMC, including advice from the Fed staff on the and among the protagonists on inflation and employment outlook, the final opinion of the Fed Chair and her voting FOMC members is another," National Australia Bank economist David de Garis said.
"The "significant underutilization of labour resources" view of the labour market carries the day as far as monetary policy is concerned. The market now waits for Dr Yellen's address to the Kansas City Fed Jackson Hole conference on Friday."
Spot iron ore fell 0.8 per cent to $US92.30 a tonne while Dalian iron ore futures were off 0.5 per cent today.
Copper leapt 2 per cent overnight on rumours of Chinese restocking but the price fell 0.5 per cent to $US6975 a tonne today on the weak manufacturing data. Gold dropped $US8 to $US1286 an ounce.
More to come…
