ASX closes sharply lower again
The Australian sharemarket fell for the fifth session out of six after receiving blows from soaring global bond yields and superficially strong headline catching GDP data that dashed rate cut hopes.
The S&P/ASX 200 index fell 52.4 points, or 0.93 per cent, to 5583.6 and the Australian dollar extended overnight gains to US1¢ at US78¢ after the economy expanded by 0.9 per cent in the March-quarter, well in excess of the 0.7 per cent consensus forecast.
But of concern to the broader economy, nominal GDP growth was a “sluggish” 0.4 per cent in the quarter, while annual growth slowed to only 1.2 per cent, the weakest result since 2009 when nominal GDP contracted one per cent according to Westpac.
Stronger net exports and an increase in inventories, mostly mining, accounted for most of the increase in the annual rate from 2.3 per cent to 2.4 per cent as domestic growth remained flat over the quarter, up just 0.8 per cent for the year.
Westpac economist Andrew Hanlan said incomes remained under “intense pressure” as the terms of trade fell by 2.9 per cent in the quarter to be 11.4 per cent lower than a year ago.
Government 10-year yields jumped 15.2 points to 2.893 per cent following the overnight surge in German bunds and 4 points rise in US 10-years to 2.25 per cent.
“As news of a possible deal between Greece and its creditors came in, bond yields – led by Germany, rose sharply,” National Australia Bank currency strategist Emma Lawson said.
US rates were capped by weaker data and comments from US Federal Reserve president Lael Brainard said a recent run of weak data casts doubt on the strength of the economy.
The Shanghai composite index was down one per cent at the close of the ASX.
In Tokyo the Nikkei index was off 0.3 per cent.
Spot iron ore jumped 2.2 per cent to $US63.02 a tonen yesterday and Dalian iron ore futures were per cent.
More to come...
