Resources hit on talk of Chinese steel slowdown
Comments by the head of BHP Billiton's iron ore division that Chinese steel production was slowing and the Reserve Bank's release of its board minutes were the main drivers of sentiment as the market drifted lower yesterday.
Comments by the head of BHP Billiton's iron ore division that Chinese steel production was slowing and the Reserve Bank's release of its board minutes were the main drivers of sentiment as the market drifted lower yesterday.The benchmark S&P/ASX200 index slipped 15.8 points to 4275, while the broader All Ordinaries index was down 15.6 points at 4365.6.Resource stocks lost ground after the president of BHP's iron ore division, Ian Ashby, said growth in Chinese demand for iron ore appeared to be "flattening" but the company was confident in the demand for commodities generally.The dollar 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 US105.77?, down from US106? on Monday.News the Gillard government's watered-down minerals resource rents 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", and the firm had engaged counsel and would start proceedings "after the legislation has been enacted and legal opinion has been finalised". Fortescue shares slipped 6? to $5.92.BHP slipped 4? to $35.31 and Rio Tinto fell 24? to $65.61.Investors digested the minutes of the Reserve Bank's March board meeting that showed the central bank would maintain interest rates at present levels unless unemployment picked up.Meanwhile, economists said the rise in the compulsory superannuation rate, from 9 to 12 per cent - to be phased in from July 2013 - was unlikely to affect the stockmarket."The equities market is huge. The daily trading volumes swamp the daily contribution from super funds," the chief economist of St George, Hans Kunnen, said. "While it's supportive, not all money has to go into equities. If the returns aren't there investors won't put their money there."Woodside Petroleum jumped 35?, or 1 per cent, to $35.32, while Oil Search firmed 1? to $6.97 and Santos lost 2? to $14.51.Transurban shares were down 15?, or 3 per cent, at $5.54 after a Canadian pension fund offloaded more than 630,000 shares, continuing the sell-off of its 12.5 per cent stake in the company.The big banks were mostly weaker with the exception of NAB, which rose 5? to $24.20.Retailers lost ground, with Harvey Norman down 2.5? to $1.925 and David Jones remaining in a trading halt, having last traded at $2.73, before its first-half earnings results today.Defensive - or safe haven - stocks were weaker, with Telstra off 2? to $3.21 and CSL down 20? to $33.80.The price of gold in Sydney closed at $US1655.80 a fine ounce, down $US5.77.