THE Australian sharemarket ended flat in quiet trading as weaker-than-expected jobs data, followed by above-consensus Chinese inflation data, dampened investor enthusiasm, after the market hit a seven-week high on further gains on Wall Street.
Cyclical stocks in the financial, materials and industrial sectors underperformed, while defensives, including telcos, consumer staples, healthcare and utilities, outperformed.
The benchmark S&P/ASX 200 fell 5.8 points to 4814.2 on light turnover after retreating from 4840.1 to 4805.4. The S&P 500 earlier rose 0.5 per cent, as the S&P 500 Financials sector rose 1.1 per cent.
The S&P/ASX 200 responded with early gains before retreating as the Australian Bureau of Statistics said its employment survey found that jobs rose by just 400 in February, versus market expectations of a 15,000 rise. Unemployment met expectations of 5.3 per cent.
Positive aspects of the data included an 11,400 rise in full-time jobs and a 2.4 per cent rise in aggregate hours worked — the biggest rise in more than two decades. “The jobs data are unlikely to derail the uptrend in the Australian equities market,” Macquarie Private Wealth client adviser Shannon Briggs said. His firm expects the S&P/ASX 200 to rise above 5500 by year’s end.
But the Australian equities market suffered another bout of weakness after China’s CPI rose 2.7 per cent on-year in February, beating market expectations of 2.4 per cent. China’s industrial production and fixed assets investment, power generation and retail sales were also very strong.
“Inflation and property bubbles are the biggest worries in China and the CPI was certainly higher than expected,” IG Markets institutional dealer Chris Weston said. “I think you could see a few analysts coming out and suggesting that China could be raising interest rates by 27 basis points as soon as the end of this month. This could be a reason to switch from resources to domestic plays such as banks.”
Goldman Sachs JBWere also said the resources sector could suffer as a result of investor caution in regard to the possibility of monetary tightening in China. “The Chinese data . . . did nothing to change (the) markets’ more cautious mood,” the broker said.
Goldman remained bullish on domestically exposed equities, arguing that the government would be forced to upgrade its economic growth forecasts in the coming months.
In a potential sign of uncertainty, defensive sectors outperformed, with Telstra up 2.7 per cent to $3.07, Woolworths up 0.6 per cent to $28.36, CSL up 1.2 per cent to $36.20 and Amcor up 0.3 per cent to $5.96.
Banks were mixed, with Westpac down 1.2 per cent at $27, National Australia Bank down 0.2 per cent at $26.75, ANZ up 0.5 per cent at $24.06 and Commonwealth Bank up 0.2 per cent at $55.80.
Resources mostly underperformed, with BHP Billiton falling 0.5 per cent to $43.01, Newcrest down 0.8 per cent at $33.90 and Lihir down 2.7 per cent at $2.90, after commodity prices fell overnight.
Downer EDI fell 2.5 per cent to $7.68.
(www.theaustralian.com.au)
