ASX closes down but off lows
The Australian sharemarket flopped back into the red again today as the spot iron ore price tumbled to a 10-year low and the resurgent US dollar hit other commodities.
The S&P/ASX 200 index dropped 30.7 points, or 0.52 per cent, to 5860.8, slightly better than the 0.9 per cent fall on Wall Street last night, as persistent warnings over bubbling global equity prices dampened global equity market sentiment.
Lacklustre Chinese manufacturing data and weak Japanese data compounded the negative sentiment.
Spot iron ore fell 2.5 per cent to a low of $US51.35 a tonne yesterday and Dalian iron ore futures tumbled another 2 per cent today as China’s mortgage lending changes failed to provide support.
The Shanghai composite index rebounded 1.2 per cent at the close of the ASX after the official Chinese PMI manufacturing index edged up to 50.1 points from 49.7.
In Tokyo the Nikkei index fell 0.7 per cent after the Tankan business survey showed a fall in capital expenditure expectations over the next year.
Paring yesterday’s fall, the Australian dollar bounced US0.4¢ to US76.35¢ while government 10-year yields firmed 2.2 points to 2.341 per cent.
The AiG performance of manufacturing index remained in the contraction zone but improved 0.9 points to 46.3, while building approvals fell 3.2 per cent in February following a 5.9 per cent jump in January.
“The continued strength in building approvals is welcome and the strong Sydney property market remains an argument against the RBA cutting interest rates again,” AMP head of investment strategy Shane Oliver said.
“However, despite the pick-up in dwelling construction the outlook for economic growth remains sub-par and the 18 per cent fall in the iron ore price since the RBA’s last meeting is adding urgency for the RBA to ease again.”
CommSec market analyst Tom Piotrowski said weakness in the local market was concentrated in the mining and energy sectors.
Iron ore fell to its lowest price since tracking began in 2008, easing by 2.6 per cent to $US51.35 per tonne and hitting big miners BHP Billiton and Rio Tinto.
"Iron ore prices are within sight of that $50 mark, so from a psychological perspective that’s doing nothing to encourage people,” he said.
Energy stocks were also more than one per cent weaker, with the price of WTI crude falling 2.2 per cent to $47.60 a barrel.
Mr Piotrowski said the rising US dollar and slowing growth meant the commodities sector would remain lower.
BHP had shed 69 cents, or 2.2 per cent, to $30.34, Rio Tinto was down 81 cents, or 1.4 per cent, at $56.41 and iron ore pure play Fortescue Metals lost 6.5 cents, or 3.3 per cent, to $1.895.Woodside Petroleum was down 64 cents, or 1.9 per cent, at $33.88 and Santos was 21 cents weaker at $6.93.
Mr Piotrowski said China’s latest monthly manufacturing figures released on Wednesday were also worrying the local bourse.
"That PMI reading fell to 49.6 down from 50, so Chinese authorities are seeing that more needs to be done,” he said.
"The fact that Chinese activity continues to soften is an issue.”
The big banks were all weaker. Commonwealth Bank lost eight cents to $93.32, National Australia Bank was down 12 cents at $38.43, ANZ dumped 19 cents to $36.45 and Westpac was 20 cents weaker at $39.18.
But Telstra was up two cents at $6.33, with telcos and healthcare stocks among the few positive sectors.
Medibank Private added five cents to $2.37.
The broader All Ordinaries index was down 29 points, or 0.49 per cent, at 5832.9.
The June share price index futures contract was 38 points lower at 5848, with 27,105 contracts traded.
National turnover was 1.3 billion securities worth $3.5 billion.
