Market ends week on low note as investors take profits
At the close, the benchmark S&P/ASX200 index was 13.5 points, or 0.28 per cent, lower at 4,709.5, while the broader All Ordinaries index was down 11.4 points, or 0.24 per cent, at 4,733.8.
On the ASX 24, the March share price index futures contract was 11 points lower at 4681, with 25,099 contracts traded.
The IG Markets strategist Evan Lucas said sentiment had turned negative following Chinese data showing that inflation was at a relatively low 2.6 per cent for last year, but had increased last month indicating no stimulus is likely soon.
However, it was offset by Japan's Prime Minister, Shinzo Abe, unveiling a $US100 billion-plus stimulus package.
"That helped our market move off its lows and it ramped up," Mr Lucas said.
"But we had some profits locked in, weighing on the mining sector, despite the iron ore price still sitting at $US158 a tonne."
"It was a bit of a mixed market despite strong leads from the US ... a lot of people are watching what will happen with corporate earnings there."
The mining giants continued to fall, with BHP Billiton leading the way, losing 73¢, or 1.95 per cent, to $36.68. Fortescue fell 12¢, or 2.47 per cent, to $4.73 and Rio Tinto tumbled $1.30, or 1.9 per cent, to $65.80.
The four major banks were mixed.
ANZ gained 10¢ to $25.25, National Australia Bank jumped 14¢ to $25.57, Westpac lost 2¢ to $26.58 and Commonwealth Bank dived 23¢ to $61.38.
The spot price of gold in Sydney closed at $US1672.72 per fine ounce, up $US14.34.
National turnover was 1.44 billion shares worth $3.14 billion.
Bonds futures prices were lower after positive comments from the European Central Bank boosted market sentiment and reduced demand for fixed income assets.
A JP Morgan interest rate strategist, Sally Auld, said bond futures sold off across the globe following the bank's meeting on Thursday.
The ECB board voted to keep its key interest rate at its historic low of 0.75 per cent and its president, Mario Draghi, said after the meeting that recent signs suggested the situation in Europe had broadly stabilised and market confidence had improved significantly.
"The ECB went from the majority voting for a rate cut in December and downgrading growth and inflation forecasts, but not actually cutting rates, to no one voting for a rate cut and Draghi seemingly talking more hawkishly," Ms Auld said.
"I don't think the market was really positioned for that, though I think we underperformed [in the selloff] compared to the US."
Ms Auld said bond futures prices had traded in a narrow range following the selloff, but could move a little lower during the US and European sessions tonight.
She said the release of unemployment figures for December next week and inflation figures for the December quarter the following week, would be the key drivers for the local market in the lead up to the Reserve Bank of Australia's February board meeting.
The March 10-year bond futures contract was trading at 96.545 (implying a yield of 3.455 per cent), down from Thursday's local close of 96.570 (3.430 per cent). The March three-year contract was at 97.140 (2.860 per cent), down from 97.160 (2.840 per cent) previously.
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The market closed lower mainly because investors were taking profits and reacting to mixed economic signals out of Asia. The S&P/ASX200 fell 13.5 points (0.28%) to 4,709.5 and the All Ordinaries slipped 11.4 points (0.24%) to 4,733.8 as sentiment turned negative after Chinese data, even though some positive news from Japan helped limit losses.
Chinese inflation for the year was relatively low at 2.6%, and a pick-up last month suggested stimulus in China was less likely. According to IG Markets strategist Evan Lucas, that shifted sentiment negative and contributed to profit taking on the ASX, particularly weighing on mining stocks despite strong iron ore prices.
Japan’s Prime Minister Shinzo Abe unveiled a more than US$100 billion stimulus package, which helped lift market sentiment and moved the Australian market off its lows, partially offsetting the negative reaction to Chinese data.
Major mining giants fell: BHP Billiton led losses, down 73¢ (1.95%) to $36.68; Rio Tinto tumbled $1.30 (1.9%) to $65.80; and Fortescue fell 12¢ (2.47%) to $4.73. The sell-off was driven by profit taking even though the iron ore price remained high at about US$158 a tonne.
The four major banks were mixed: ANZ rose 10¢ to $25.25, National Australia Bank gained 14¢ to $25.57, Westpac slipped 2¢ to $26.58, and Commonwealth Bank fell 23¢ to $61.38.
Bond futures prices fell after positive comments from the European Central Bank boosted market sentiment and reduced demand for fixed-income assets. JPMorgan strategist Sally Auld noted a global sell-off in bond futures after the ECB meeting, and futures traded in a narrow range but could move further during US and European sessions.
According to the article, investors should watch upcoming unemployment figures for December (due next week) and inflation figures for the December quarter (the following week), as these releases are likely to be key drivers ahead of the Reserve Bank of Australia’s February board meeting.
Spot gold in Sydney closed at US$1,672.72 per fine ounce, up US$14.34. National turnover on the ASX was 1.44 billion shares worth $3.14 billion. On the futures side, the ASX 24 March share price futures contract was 11 points lower at 4,681 with 25,099 contracts traded.
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