The Australian sharemarket closed in the red as domestic and European growth concerns offset positive Chinese data out yesterday.
Despite a flat lead from Wall Street the S&P/ASX 200 index dropped 0.5 per cent at the open and closed 20.5 points, or 0.38 per cent, down at 5432.8 following the fourth earnings guidance downgrade from a national retailer, this time Kathmandu.
Last night positive sentiment from the China data was dented by weak manufacturing and services PMI data from France and a surprise fall in the German services PMI index.
The US manufacturing PMI rose to a four-year high while US existing home sales rose 4.9 per cent, but the devil was on the detail with growth dominated by the most expensive houses and declines on the cheaper end.
European sentiment was offered some support by comments over the weekend from European Central Bank president Mario Draghi that the eurozone bank’s had access to “unlimited liquidity” until the end of 2016 and that rates would remain low.
The Shanghai composite index was up 0.2 per cent at the close of the ASX as investors belatedly focused on the positive PMI data and ignored the Beige Book private survey which indicated the slowdown had deepened over the quarter.
In Tokyo the Nikkei index was up 0.1 per cent.
The Australian dollar was slightly easier at US94.20¢ but Government 10-year yields fell 4.9 points to 3.643 per cent, despite the 2 point rise in US 10-eyars to 2.63 per cent.
However, ANZ global; currency strategist Richard Yetsenga markets were “too sanguine” about the stability in short duration interest rates continuing to hold.
“Globally the share of PMIs above 50 is approaching pre-crisis levels, US capacity use is nearing pre-crisis levels, and the OECD’s leading indicator has again turned higher in a continuation of its post-2011 pickup,” he said.
“These factors imply that US bond yields have likely based, with global implications, and the USD is likely to continue strengthening against the periphery. More broadly, short end pricing will likely become more important to risk assets, relative to movements in long ends.”
Dalian iron ore futures fell one per cent following the 1.3 per cent rise in spot iron ore to US93.50 a tone yesterday, while copper dropped 0.5 per cent to $US6850 a tonne and gold was slightly firmer at $US1315 an ounce.
Miners and banks lost ground, offsetting gains by several retailers and industrial companies.
Commsec market analyst Juliette Saly said seasonal factors were at play due to a lack of economic news.
“We’re coming to the end of the financial year so a lot of people are moving out of equities, or putting their financial books in order and taking profits, in the last week of the financial year,” she said.
Banks were the worst performers, with ANZ dropping 36 cents to $33.62, National Australia Bank shedding 26 cents to $33.08, Westpac losing 22 cents to $34.15 and Commonwealth Bank 21 cents weaker at $81.58.
Most miners posted small falls, with Rio Tinto dropping 47 cents to $59.53, Fortescue Metals shedding three cents to $4.36 and OZ Minerals losing six cents to $4.18.
BHP edged one cent higher to $36.46.
Most company news came from the retail sector, which drew mixed reactions.
David Jones gained 15 cents to $3.94 after its takeover by South Africa’s Woolworths appeared more certain to proceed, as Woolworths’ offered a premium for Solomon Lew’s remaining shares in Country Road.
Mr Lew is a major shareholder in David Jones and may have proved a stumbling block in the department store’s takeover without the offer for his Country Road stake.
Outdoor clothing retailer Kathmandu shed 40 cents, or 12 per cent, to $2.92 after forecasting a fall in underlying earnings as winter sales proved slow.
Among other major retailers, Harvey Norman lost three cents to $3.07 and JB Hi-Fi dropped 26 cents to $17.99.
The broader All Ordinaries index was down 17.6 points, or 0.32 per cent, at 5,415.1.
The September share price index futures contract was 15 points lower at 5,394, with 18,265 contracts traded.
National turnover was 1.9 billion securities worth $4.06 billion.