ASX closes only slightly higher
The Australian sharemarket limped to a slightly firmer finish as investors struggled for buying catalysts in the face of US rate rise uncertainty and high valuations.
The S&P/ASX 200 index jumped 0.7 per cent at the open after the US S&P 500 index edged up 0.2 per cent to a record closing high last night, but steady profit taking in the major banks knocked the index to close up just 2.4 points, or 0.04 per cent, at 5664.7.
Yield hunting sentiment has been capped by the blowout in global and domestic bond yields over the past month, while concerns over the banks soft earnings reports have been stoked by warnings from the bank regulator that the big four needed to rein in lending to housing investors, one of the few growth areas.
“With stock markets valuations relatively high, markets remain very sensitive to the trend in bond yields,” CMC Markets chief analyst Ric Spooner said. “The question of when and how fast the US Fed begins to lift interest rates remains the dominant macro issue for equity markets and will be front of mind for traders again today.”
Government 10-year yields eased 1.5 points to 2.927 per cent, but remained 70 points above the year’s low, and the Australian dollar rose US0.2¢ to US79.20¢ as debate over the US Federal Reserve’s rate intentions continued to rage.
“The US economic outlook looks moderate and may keep rate hike expectations at bay,” Royal Bank of Scotland head of Asian markets strategy Greg Gibbs said.
Overnight the global growth outlook was clouded by an improvement in the euro wide PMI index but fall in that of economic powerhouse Germany.
The epic drama over Greece’s dire funding predicament continued but investors appeared largely unperturbed by warnings that the country would not make a scheduled repayment to the IMF on June 5.
The Shanghai composite index jumped 2 per cent to a fresh seven-year high.
In Tokyo the Nikkei index was up 0.2 per cent.
Spot iron ore bounced 1.5 per cent to $US57.91 a tonne and Dalian iron ore futures were down 0.5 per cent today.
Among the miners, BHP Billiton was up one cent, or 0.03 per cent, to $29.25, Fortescue Metals Group was down one cent, or 0.47 per cent, to $2.11 and Rio Tinto was down 15 cents, or 0.26 per cent, at $56.75.
Oil and gas producers were higher with Woodside up 83 cents, or 2.38 per cent, to $35. 70 and Santos gaining 18 cents, or 2.28 per cent, to $8.09.
Among the banks, ANZ shares were off 17 cents to $32.05, CBA shares were down 45 cent to $83.11, NAB was off 15 cents to $33.23 and Westpac gave up nine cents to $32.56.
Telstra was down two cents to $6.20.
Among the retailers, Wesfarmers was off three cents to $43.33 and Woolworths was down 18 cents to $28.18.
Invocare was up two cents, or 0.15 per cent, to $13.20 after the funeral homes and cemeteries operator withdrew a proposed termination benefits package for former chief executive Andrew Smith following concerns by some larger shareholders.
Oroton was smashed down 34 cents, or 13.28 per cent, at $2.22 after the luxury fashion retailer scrapped its forecast of earnings growth, sending its share price to six year lows.
