ASX ends quiet day in the red
The Australian sharemarket finished a quiet session in the red after the World Bank downgraded its global growth forecast, turning the spotlight on stretched valuations.
Following a flat lead from Wall Street the S&P/ASX 200 index lost 15.6 points, or 0.29 per cent, to 5454 with miners leading the losses as the Australian dollar edged higher amid talk of a return to parity with the US dollar.
The World Bank said the global economy would expand 2.8 per cent this year, compared with its January projection of 3.2 per cent, while the US forecast was slashed to 2.1 percent from 2.8 percent and estimates for Brazil, Russia, India and China were also lowered.
The Shanghai composite index was off 0.2 per cent at the close of the ASX after MSCI bowed to fund manager pressure saying Chinese stocks would not be included in its benchmark global indices. Fund managers objected because of restrictions placed on foreigners in trading Chinese stocks.
In Tokyo the Nikkei index was up 0.4 per cent.
The Australian dollar rose US0.3¢ to US93.90¢ and Government 10-year yields jumped 6.9 points to 3.853 per cent despite the ANZ-Roy Morgan consumer confidence index and the Westpac measure both showing no evidence of an inclination to bounce from the post-Budget plunge.
The dollar has gained upside momentum since the European Central Bank cut rates last week and introduced negative rates for bank excess reserves, making domestic yields more attractive to eurozone investors.
"The euro and yen should be increasingly viewed as the best currencies to fund carry trades, in our view," Royal Bank of Scotland currency strategist Greg Gibbs said. "As such, we expect both to weaken."
Global benchmark US 10-year yields climbed 5 points to 2.65 per cent after an increase in the NFIB Small Business Optimism index and a jobs opening report bolstered hopes the winter slowdown was receding.
Spot iron ore fell 0.7 per cent to US93.60 a tonne yesterday, Dalian iron ore futures slipped 0.3 per cent today, copper bounced 0.2 per cent to $US6680 a tonne and gold climbed $US6 to $US1261 an ounce.
More to come…
