Sharemarket closes in the red
The Australian sharemarket finished in the red as missed earnings forecasts offset relief over the US Federal Reserve's backtracking over hints of a rate rise before mid-year.
In late afternoon trade the Australian dollar fell US0.5� to US77.90� on reports ratings agency Standard & Poors had warned Australia's AAA rating was at risk because of the Federal Budget constraints.
Following a flat lead from Wall Street last night the S&P/ASX 200 index traded in the red for most of the session before finishing down 11.5 points, or 0.19 per cent, at 5904.2 after iiNet and Wesfarmers reminded investors of the risks of companies missing forecasts.
Investors displayed a muted response to the Fed minutes which said "many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time".
Reinforcing the Fed's indecision and countering bullish views on US growth momentum, US producer prices fell 0.8 per cent in January and industrial production fell 0.4 per cent, both double forecasts.
"The FOMC notes the challenge of justifying rates 'lift off' with inflation not showing progress towards the 2 per cent target, and these numbers play firmly to these concerns, " National Australia Bank global head of currency strategy Ray Attrill said. "We note that US equities and the dollar have already reversed some of their knee jerk respective gains/losses, and it's worth remembering here that the mood music coming from Fed officials ahead of the minutes - but since the meeting itself - had been consistent in suggesting that a June Fed 'lift-off' is still a very live risk."
The dollar initially rose to US78.40¢ it but fell sharply on the credit rating reports, while government 10-year yields fell 4.9 points to 2.553 per cent after US 10-years settled flat at 2.07 per cent.
In Tokyo the Nikkei index climbed 0.5 per cent to a 15 year high after exports rose 17 per cent in January and imports fell 9 per cent, resulting in Japan's 31st consecutive monthly trade deficit.
In quiet Chinese holiday affected trade spot iron ore rose 0.8 per cent to $US64.44 a tonne.
Gold rose $US5 to $US1215 an ounce and Brent crude oil slumped 4.7 per cent to $US59.50 a barrel after a bigger than forecast in US inventories.
More to come…
