Market breaks rising spiral on China bank liquidity fears
At the close on Wednesday, the benchmark S&P/ASX 200 Index was down 17 points, or 0.32 per cent, at 5356.1. The broader All Ordinaries was down 14.4 points, or 0.27 per cent, at 5356.8.
Concerns about a lack of funds in China's banks overcame a buoyant mood in early trade.
"There's a concern that the reason for the jump may be an attempt by Chinese authorities to withdraw liquidity from the system and cool down this shadow banking system of theirs and the property market," CMC analyst Ric Spooner said. "It can cool the business and small-business sectors in particular and our economy is particularly exposed to China."
Early trading gains were sparked by weak US jobs numbers, which added to expectations the US Federal Reserve's stimulus measures would continue until next year.
But by the end of the session, the banks had dragged the market lower. Westpac dropped 24¢ to $33.87, ANZ was down 26¢ at $31.97, Commonwealth Bank shed 15¢ to $74.61 and National Australia Bank was 60¢ lower at $35.47.
That offset gains by some of the miners, particularly BHP Billiton, which rose for a third consecutive day, adding 45¢ to $37.50. Rio Tinto dropped 32¢ to $63.65.
AGL Energy lost 28¢ to $15.30 after it said it expected to take a $25 million to $30 million hit to its full-year profit due to an unusually warm winter.
Rival energy provider Origin gained 21¢ to $14.46 after it announced managing director Grant King's tenure had been extended.
Gold was at $US1338.68 an ounce, up $US21.18.
The dollar was trading lower despite a strong rally following the release of higher than expected inflation figures. At 5pm on Wednesday it was at US96.53¢, down from US96.55¢. It had earlier hit a five-month high of US97.58¢ after the release of the September-quarter consumer price index figures.
Bond futures prices moved higher when the latest US non-farm payrolls report showed the US economy added 148,000 jobs in September, well below the gain of 180,000 the market was expecting.
The data increased expectations the US Fed would hold off on winding back its economic stimulus program until next year.
Frequently Asked Questions about this Article…
The sharemarket fell due to a jump in China's money market rate, which raised concerns about liquidity in Chinese banks and overshadowed earlier positive trading sentiment.
Concerns about a lack of funds in China's banks led to fears that Chinese authorities might be withdrawing liquidity to cool down the shadow banking system and property market, impacting investor confidence.
Weak US jobs numbers initially sparked gains in early trading as they increased expectations that the US Federal Reserve would continue its stimulus measures into the next year.
Major banks like Westpac, ANZ, Commonwealth Bank, and National Australia Bank saw declines, which contributed to the overall market downturn.
Yes, some miners, particularly BHP Billiton, performed well, with BHP rising for the third consecutive day.
AGL Energy's stock price fell after it announced an expected hit to its full-year profit due to an unusually warm winter.
Despite a strong rally following higher than expected inflation figures, the Australian dollar traded lower by the end of the day.
Bond futures prices moved higher after the US non-farm payrolls report showed fewer jobs added than expected, reinforcing expectations that the US Fed would delay reducing its economic stimulus program.
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