Market closes lower again
Another shock bank earnings result sent the Australian sharemarket tumbling at the open but bargain hunters almost halved the early loss.
The S&P/ASX 200 index fell 1.5 per cent at the open after National Australia Bank’s profit report became the third disappointment this season, but the lure of looming dividend payments enticed the brave back in and the index rallied to close down 46.5 points, or 0.82 per cent, at 5645.7.
The index result was flattered slightly by the suspension of NAB shares after the lender announced it would raise an ASX record of $5.5 billion to shore up its balance sheet ahead of increased capital requirements in coming years.
The major miners fell despite a 3.2 per cent bounce in spot iron ore to $US60.89 a tonne yesterday after Dalian iron ore futures fell 2 per cent today.
The Shanghai composite index was down another 2.5 per cent at the close of the ASX on speculation new listings would absorb liquidity, valuations had become excessive and the government would take measures to control margin trading.
Morgan Stanley downgraded Chinese stocks for the first time in more than seven years.
After a three-day holiday, in Tokyo the Nikkei fell 1.3 per cent.
The Australian dollar fell US0.5 cents from its overnight high of US80.30 cents to US79.80 cents after US rate hike fears were stoked and rumours the Reserve Bank would reiterate its easing bias in its monetary policy statement.
US Federal Reserve Atlanta president Dennis Lockhart said the weak first quarter was probably transitory and that the market was correct in pricing in a September hike.
Government 10-year yields followed the global rebound in bond yields, climbing 7.2 points to 2.996 per cent.
The move was triggered by the blowout in German yields after bond guru’s Bill Gross from Janus Capital and Jeff Gundlach from Doubleline Capital both said shorting bunds trading at negative yields made a lot of sense, even though it was a technically difficult trade to execute in size.
German 10-year hit a low of minus0.05 per cent two weeks ago and soared to 0.59 per cent this week, while yesterday US 10-years rose 4 points to 2.24 per cent, up from 1.88 per cent three weeks ago.
The last of the big four banks, the National Australia Bank, released its first half cash profit of $3.32 billion this morning.
"They are treading water rather than coming back in a strong manner," CommSec market analyst Steven Daghlian said.
"It’s been a mixed profit result: the National Australia Bank has largely come in line with expectations, CBA didn’t enjoy an improvement in profits, ANZ came in a little better than forecast, while Westpac missed the mark."
The Commonwealth was up 13 cents at $83.11 after falling nearly 6 per cent yesterday.
Westpac had lost nine cents to $33.90 and ANZ shed 20 cents to $33.01.
Among the miners, BHP Billiton fell 46 cents to $31.89, after shareholders approved its plans to demerge.
Rio Tinto had lost 58 cents to $58.54 and Fortescue Metals was flat at $2.58.
Meanwhile, the official jobless rate has risen slightly to 6.2 per cent in April from 6.1 per cent in March.
Phillip Capital senior client adviser Michael Heffernan said the figure shows the unemployment rate appears to have steadied and had little impact on an already weak market day.
The broader All Ordinaries index was down 45.8 points, or 0.80 per cent, at 5645.1.
The June share price index futures contract was 45 points lower at 5610 with 41,552 contracts traded.
National turnover was 1.64 billion securities worth $5.89 billion.
