ASX closes lower as miners weigh
The Australian sharemarket clawed back most of its early losses again as another leg higher in defensives offset sharp falls in iron ore miners.
Following a marginally firmer close on Wall Street last night the S&P-ASX 200 rose slightly at the open, but it fell to a 0.5 per cent loss and closed down 5.3 points, or 0.09 per cent, at 5898.9 as the much anticipated European Central Bank quantitative easing failed to ignite fresh global buying interest.
Spot iron ore dived 3.6 per cent to a six-year low of $US59.73 a tonne on news of the downgrade in China's growth target to about 7 per cent yesterday, while Dalian iron ore futures were down another 0.8 per cent today.
"Having been rejected by the 6000 level (at 5996.9 to be precise for the ASX 200), Australian shares are also vulnerable to a short term correction particularly with the forward PE now around 16 times which is above its long term average of 14 times leaving it vulnerable to any bad news," AMP head of investment strategy Shane Oliver said. "Iron ore below $US60/tonne certainly won't help."
The Australian dollar reversed a US0.4¢ fall to trade little changed at US78.10¢, while government 10-year yields firmed 1.2 points to 2.637 per cent.
The Shanghai composite index was up 0.1 per cent at the close of the ASX.
In Tokyo the Nikkei index rose 0.9 per cent as the yen tumbled against the rampant US dollar.
The cautious global equity market mood stemmed from further weak US data last night, but the US dollar shrugged off the news as the euro tumbled to fresh 11-year lows below 1.10 to the US dollar.
The ECB left interest rates unchanged as expected and confirmed they would commence buying euro-denominated public sector securities in the secondary market from Monday, even targeting bonds with yields low as minus 0.2 per cent.
Optimistically given subdued US growth and inflation during four rounds of QE, the ECB has forecast inflation to rise from near zero to 1.5 per cent this year and GDP growth to hit 2.1 per cent in 2017.
German 10-year bund yields collapsed 11 points to 0.32 per cent.
Last night in the US 10-years were slightly easier at 2.09 per cent after US factory orders fell 0.2 per cent in January, while weekly jobless claims climbed to 320,000, the highest level in eight months.
More to come…
