Signs of cooling economy unsettle outlook
The benchmark S&P/ASX 200 slipped from five-year highs, dropping 25 points, or 0.5 per cent, to 5166.2, while the broader All Ordinaries lost 24.7 points, or 0.5 per cent, to 5143.9.
"A lot of it came down to release of the manufacturing data," said JBWere executive director Mike Kendall. "We're looking at a slower growth outcome, or a lower growth outcome, that really suggests that the economy is quite sluggish."
The Australian Performance of Manufacturing index fell 7.7 points to 36.7, its lowest since May 2009 and the lowest export reading since exports were included in 2004.
As a result, mining stocks continued to take a drubbing, with the sector down 1.4 per cent, consumer staples dipped 0.7 per cent and financials edged down just 0.2 per cent. Telecommunications was the only sector to finish higher, up 1 per cent. BHP lost 1.6 per cent to $32.17. Rio Tinto finished 1.4 per cent lower at $55.03.
While most of the major bank stocks eased after strong runs on Tuesday, Westpac continued to push record highs ahead of its earnings report, due out on Friday.
Westpac rose 0.8 per cent to $34.06, while CBA slipped 0.7 per cent to $72.95, ANZ shed 0.5 per cent to $31.89 and NAB was flat at $33.95.
Telstra was the main beneficiary of investors' search for yield. It pushed to its highest since March 2005, closing 1 per cent up at $5.03. Strong results from its venture into 4G and an aim to increase its fully franked dividend, which is already at 28¢ a share, also buoyed the telco's stock.
A drop in Qantas domestic passengers in March hurt the airline, down 1.8 per cent to $1.87.
The Australian dollar failed to gather any steam, with markets closed in China and many centres in Europe closed for Labour Day.
An impending interest rate decision from the US Federal Reserve also held the Aussie dollar back.
In late trading it was buying $US1.0365.
Frequently Asked Questions about this Article…
The S&P/ASX 200 fell after a key manufacturing indicator weakened, sliding 25 points (0.5%) to 5,166.2. The broader All Ordinaries also lost 24.7 points (0.5%) to 5,143.9 as investors reacted to signs of slower economic growth.
The Australian Performance of Manufacturing index dropped 7.7 points to 36.7 — its weakest reading since May 2009 and the lowest export reading since exports were included in 2004. A sharp fall in the PMI can signal sluggish economic activity, which can weigh on share prices and sector performance.
Mining stocks were hit, with the sector down about 1.4%. BHP fell 1.6% to $32.17 and Rio Tinto finished 1.4% lower at $55.03, reflecting investor concern about weaker growth prospects.
Most major banks eased after strong recent runs, but Westpac stood out by pushing to record highs ahead of its earnings report, rising 0.8% to $34.06. Commonwealth Bank (CBA) slipped 0.7% to $72.95, ANZ fell 0.5% to $31.89, and NAB was flat at $33.95.
Telstra climbed about 1% to $5.03 — its highest level since March 2005 — as investors searched for yield. The telco reported strong results from its 4G rollout and signalled an aim to increase its fully franked dividend, which is currently 28¢ a share.
Qantas fell 1.8% to $1.87 after a reported drop in domestic passengers in March, which weighed on investor sentiment for the airline.
The Australian dollar failed to gain momentum as markets were closed in China and many European centres for Labour Day, and an impending US Federal Reserve interest rate decision kept the currency subdued. In late trading the AUD was buying US$1.0365.
Telecommunications was the only sector to finish higher, up about 1%. Mining was down 1.4%, consumer staples dipped 0.7%, and financials edged down 0.2%. Sector moves like these reflect how different parts of the market respond to economic data and investor demand for yield.
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