Asx closes lower on negative news

Gareth Costa and AAPThe West Australian The Australian sharemarket finished the week on a losing note as offshore demand for domestic assets waned in the face of a firmer US dollar and

official Chinese data showed manufacturing growth slowed to near stall speed. The S&P/ASX 200 was already down 0.4 per cent before the Chinese data as the Australian dollar fell back to

near four-month lows, indicating slack foreign investor interest in stocks. Mining stocks were hammered after metal prices sagged overnight while the major banks were mostly firmer, leaving

the benchmark index down 18 points, or 0.35 per cent, at 5086.1 points. Missing forecasts for an increase, the China February PMI dropped from 50.4 points to 50.1 points - a reading below 50

indicates contraction - while the HSBC index fell to 50.4 points from 52.3 points in January. “The final February HSBC manufacturing PMI suggests a slower pace of expansion. But China’s

recovery continues on improving domestic demand conditions and the labour market,” HSBC China economist Hongbin Qu said. In Tokyo the Nikkei index was up 0.6 per cent and the shanghai

composite index was down 0.5 per cent. Shrugging off US Federal Reserve chairman Ben Bernanke’s staunch defence of quantitative easing this week the US dollar recovered lost ground against

most risk assets and metals. Gold fell $US25 to $US1577 an ounce and copper extended its overnight 0.6 per cent drop, sliding another 0.5 per cent to $US a tonne. The Australian dollar fell

0.7¢ to $US1.0210, before bouncing to $US1.0230 as analysts sounded notes of caution over the “bankability” of the capital expenditure data out yesterday which sparked a sharp reduction in

rate cut hopes. Offering some upside, the Australian PMI manufacturing index bounced 5.4 points to 45.6 points. “Our view remains that the handover from mining investment to other sources of

growth will be challenging,” ANZ economists said. With further implications for domestic growth, Royal Bank of Scotland currency strategist Greg Gibbs said the trend in Chinese PMI readings

suggested there had been a consistent slowing in the Chinese economy for the last 18 months or so. “This may be a natural progression to a more mature economy, but the market is revising

its assessment on China from one of a cyclical slowdown to one of permanent slowdown,” he said. He added that China was exhibiting signs of “financing stress” that could force the government

to attempt to clean up excessive credit growth. “The process of doing so may cause disruption to the Chinese economic outlook,” he said. Overnight bullish sentiment waned as the US edged

closer to facing $US80 billion in sequestratiojn - scheduled spending cuts after Democrats failed to muster enough votes to enforce their alternative spending plan that would limit the

growth-hit estimated at 0.5 per cent of GDP if no changes were agreed to. Underpinning the US dollar’s firmer outlook was an increase in the Chicago PMI index and a fall in weekly jobless

claims. The broader All Ordinaries index was down 19.5 points, or 0.38 per cent, at 5,100.9. On the ASX 24, the March share price index futures contract was 10 points weaker at 5,075 with

26,006 contracts traded. CommSec market analyst Steve Daghlian said despite the falls the local bourse finished 1.25 per cent higher for the week as profits season came to a close. “Today

wasn’t great for the miners who have actually lost ground over earnings season,” Mr Daghlian said. “It came after a slight fall on US markets.” Resources stocks lost 0.5 per cent in

February, while financial stocks have gained 6.5 per cent over the same period. Since the start of the year the Australian sharemarket has gained 9.3 per cent. However, Mr Daghlian said

there were still concerns over US fiscal cliff negotiations. “This will be an important driver of our market next week,” Mr Daghlian said. On Wall Street in the US overnight, the Dow Jones

Industrial Average index flirted with an all-time high but closed in the red after a sell-off in the last 10 minutes. Meanwhile, manufacturing activity in China expanded at its slowest rate

in five months in February, but maintained the economic recovery despite the Chinese New Year holiday. On the local market, among the major banks, Commonwealth Bank lifted 58 cents to

$67.85, ANZ fell 10 cents to $28.62, National Australia Bank advanced 20 cents to $30.40, and Westpac improved 26 cents to $31.03. In the resources sector, global miner BHP Billiton was 23

cents poorer at $36.84, and Rio Tinto eased 97 cents to $66.08. Among other stocks, broadcaster Ten Network lifted three cents to 34.75 cents amid speculation that Seven Group chairman Kerry

Stokes is increasing his stake in the company. Shares in Sirius Resources increased 38 per cent to $2.85 after the minerals explorer announced a nickel discovery at its Frasers operation in

WA. National turnover was 1.8 billion securities worth $4.6 billion, with 412 stocks down, 623 up and 323 unchanged. GET THE LATEST NEWS FROM THEWEST.COM.AU IN YOUR INBOX. Sign up for our

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