Stocks extend slide on China concerns
Australian shares fell for a sixth day in a row, led by miners, as investors braced for the weakest Chinese economic growth numbers since the global financial crisis.
Fortescue Metals, which sells the bulk of its iron ore to China, fell 6.1 per cent, or 30 cents, to $4.62, its sharpest one-day dive since November 23.
The benchmark S&P/ASX200 ended the day down 28.5 points. or 0.7 per cent, to 4068, while the broader All Ordinaries dropped 29 points, or 0.7 per cent to 4106. The losing streak is the longest for the ASX in more than seven month.
‘‘The whole Australian economy and the strength of it is predicated on a strong China," said IG Markets analyst Cameron Peacock.
"If we see Chinese GDP numbers fairly weak, even though its a backwards looking indicator, it’s certainly going to send shockwaves and tremors through global markets," he said, adding "I think people are just thinking a little bit ahead of the curve and preparing themselves for that downside risk.’’
Among the market’s main segments, gold miners slumped 4 per cent, followed by materials, down 2.4 per cent.
Energy stocks lost 0.9 per cent while health firms bucked the trend, adding 1.1 per cent.
Also dragging on sentiment was the June labour force figures, which showed the economy shed 27,000 jobs, the most in 2012. Full-time jobs shrank by 33,500 while part-time positions rose 6,600.
‘‘I think the composition of the jobs report caught a few people off guard, so that was perhaps a dampener to sentiment,’’ said City Index chief market analyst Peter Esho.
The dollar also fell on the jobs figures as investors raised their bets of a cut in official interest rates when the Reserve Bank next meets on August 7. The dollar fell about three-quarters of a US cent to $US1.017 in recent trading.
Investors view the prospect of a rate cut next month by the Reserve Bank as almost a three-in-four chance.
European shares, meanwhile, have opened lower. Investors there are also following Wall Street's late drop after the minutes to the US Federal Reserve's June meeting dampened hopes for fresh risk-asset-boosting stimulus in the near term.
The FTSEurofirst 300 weakened 0.8 per cent to 1,031.11 by 0703 GMT, having closed flat yesterday.
The Fed minutes showed the world's biggest economy would have to worsen further before the central bank eased monetary policy further. A few officials thought more stimulus was justified, but the majority were unconvinced.
"It doesn't change my overall view that QE3 is going to happen later this year or the beginning of next year. But in the short term this was a disappointment," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
The world's second-largest economy, meanwhile, may post June quarter gross domestic product growth of 7.7 per cent, according to Bloomberg, a result that would be the worst since the middle of 2009.
Such a result would compare with a reported annual growth rate of 8.1 per cent for the March quarter. The GDP figures are scheduled to be released at noon, AEST, tomorrow.
Even within the expected slowdown, China should still be able to maintain a 7-8 per cent annual growth rate in the next 10 years, said Yu Bin, director of macro-economic research department of the Development Research Centre (DRC) - a think tank linked to China’s cabinet.
"The economy is likely to stabilise and even recover modestly in the second half as such policy measures show results," he said.
On the local market, in the resources sector, global miner BHP Billiton was off 65 cents at $30.40, and Rio Tinto was $1.40 weaker at $54.25.
Mineral sands miner Iluka Resources was 29 cents lower at $8.98 after it lifted its revenue in the first half of the year despite sales dropping by more than a third.
Among the major banks, National Australia Bank was off 13 cents at $23.46, ANZ fell 26 cents to $22.18, Commonwealth Bank eased nine cents to $53.51, and Westpac advanced 5 cents at $21.87.
In the retail sector, Myer declined 1.5 cents to $1.66 after the struggling department store chain said it would make 100 jobs redundant.
TelstraAmong other stocks, telco Telstra slipped one cent to $3.85 - snapping five days of gains - after it said it was selling its New Zealand subsidiary TelstraClear to Vodafone for $NZ840 million ($A660 million).
Toll roads operator Transurban shares rose 15 cents to $5.83 after it said it had lifted its annual toll revenue by nearly six per cent.
Construction products company CSR lost three cents to $1.20 as it said the soft housing market and low aluminium prices may drag on its first-half earnings.
Shares in ClearView Wealth Management soared by 15 per cent after the financial services group received a $220 million takeover offer.
The surprise 50-cents-a-share offer came from CCP Bid Co, a subsidiary of private equity manager Crescent Capital Partners Management.
Shares in ClearView rocketed on the news, rising 7 cents to 53.5 cents.
Preliminary national turnover was 1.32 billion securities worth $3.65 billion, with 534 stocks down, 333 up and 336 unchanged.
On the ASX 24, the September share price index futures contract was down 26 points at 4,038 points, with 23,648 contracts traded, according to preliminary calculations.
With Jane Lee, BusinessDay and AAP, Reuters