COMMENTS by the head of BHP Billiton's iron ore division that Chinese steel production is slowing, and the release of the Reserve Bank's recent board minutes, were the main drivers of sentiment yesterday as the sharemarket drifted lower.
The benchmark S&P/ASX 200 Index slipped 15.8 points to 4275.
Resource stocks lost ground after BHP iron ore division president Ian Ashby said growth in Chinese demand for iron ore appeared to be "flattening", but that the company remained confident in the long-term demand for commodities generally.
The currency slipped against its major trading partners as Rio Tinto also signalled that China's near-term growth was waning, raising concern that commodity prices will fall.
At 5pm, the dollar was trading at $US1.0577, down from $US1.06.
And news that the government's watered-down minerals resource rent tax which will raise $11 billion in three years from iron ore and coalminers passed through the Senate did little to mollify miners. Fortescue Metals, the country's third-biggest iron ore exporter, said the legislation was "complex" and "inefficient". It said it had engaged lawyers and would start proceedings "after the legislation has been enacted and legal opinion finalised". Fortescue shares slipped 6? to $5.92.
BHP Billiton shares lost 4? to $35.31 and Rio Tinto dropped 24? to $65.61.
Investors digested the minutes of the RBA's March board meeting that showed the central bank would maintain interest rates at present levels unless unemployment increased.
Economists said the increase in the compulsory superannuation rate, from 9 to 12 per cent to be phased in from July next year was unlikely to affect the sharemarket. "The equities market is huge. The daily trading volumes swamp the daily contribution from super funds," St George chief economist Hans Kunnen said.
Woodside Petroleum rose 35?, or 1 per cent, to $35.32, while Oil Search firmed 1? to $6.97 and Santos lost 2? to $14.51.
Transurban was down 15?, or 3 per cent, at $5.54, after a Canadian pension fund sold more than 630,000 shares, continuing the sale of its 12.5 per cent stake.
The big four banks were mostly weaker, with the exception of National Australia Bank, which advanced 5? to $24.20.
Retailers lost ground, with Harvey Norman down 2.5? to $1.925 and David Jones remained in a trading halt, having last traded at $2.73, before its first-half earnings result today.
With AAP
Frequently Asked Questions about this Article…
Why did the Australian sharemarket drift lower yesterday and what did the ASX 200 do?
Sentiment slipped after comments from the head of BHP Billiton's iron ore division about slowing Chinese steel production and the release of the Reserve Bank's recent board minutes. The benchmark S&P/ASX 200 Index eased, falling 15.8 points to 4,275.
How did comments from BHP and Rio Tinto affect resource stocks and commodity sentiment?
BHP's iron ore division president said growth in Chinese demand for iron ore looked like it was flattening, and Rio Tinto signalled near-term growth in China was waning. Those remarks weighed on resource stocks and raised concern that commodity prices could fall.
What did the Reserve Bank of Australia (RBA) minutes say and what does that mean for interest rates?
The RBA's March board minutes showed the central bank would maintain interest rates at present levels unless unemployment increased. Investors digested the minutes as an indication the RBA was not looking to change rates imminently unless labour-market conditions deteriorate.
How did the Australian dollar perform amid the market moves?
The Australian dollar slipped against major trading partners and was trading at US$1.0577 at 5pm, down from about US$1.06.
What happened with the minerals resource rent tax (MRRT) and how did miners respond?
A watered-down minerals resource rent tax package passed through the Senate; it is expected to raise about $11 billion over three years from iron ore and coal miners. Fortescue Metals called the legislation 'complex' and 'inefficient', said it had engaged lawyers and planned to start proceedings after the law is enacted and legal opinion is finalised.
Which major miners’ share prices moved and what were their prices?
Resource names weakened: BHP Billiton shares were reported at $35.31, Rio Tinto at $65.61 and Fortescue Metals at $5.92 following the comments and tax news.
How did energy and oil stocks perform during the session?
Some oil and gas stocks were mixed: Woodside Petroleum rose to $35.32, Oil Search firmed to $6.97, while Santos eased to $14.51.
What notable moves occurred among corporates and banks that everyday investors should note?
Transurban fell after a Canadian pension fund sold more than 630,000 shares as it continued to reduce a 12.5% stake; the stock traded at $5.54. The big four banks were mostly weaker, with National Australia Bank advancing to $24.20. Retailers lost ground too — Harvey Norman was about $1.925, and David Jones remained in a trading halt after last trading at $2.73 ahead of a first-half earnings release.
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