SYDNEY: The Australian sharemarket has pulled itself into the black after dipping at the start of trade, as a recovery in banking shares offsets a mining decline on the back of iron ore price dropping to its second-lowest price in ten years.
At the 10.15am (AEDT) official market open, the benchmark S&P/ASX200 index was up 20.4 points, or 0.39 per cent, to 5213.4, while the broader All Ordinaries index lifted 20.6 points, or 0.39 per cent, to 5268.5.
The market had initially dropped around 0.3 per cent to 5196 points as the major mining stocks fell on fresh downward movement in the iron ore price.
Iron ore tumbled to its second-lowest price in 10 years overnight as majors’ expansion plans came into focus.
The commodity has risen just once through the past 19 trading sessions as persistent worries around rising supply and slowing demand growth weigh heavy.
IG market analyst Evan Lucas said this will again bring up issues of break-even levels for mid-sized and junior miners..
“It has yet to play out in share prices too, BHP lost over 3 per cent in London overnight, and I would expect that to translate into Australian trade today,” he said.
CMC Markets chief analyst Ric Spooner said last night’s weak session on commodity markets is also likely to be a negative for the ASX200 index today.
“While some stocks in the mining and energy sectors have been supported by the potential for merger and acquisition activity, this is not a factor for the big stocks which are likely to drift lower if commodity prices continue to weaken,” Mr Spooner said.
Oil prices slipped for a second straight day as traders worry about abundant supplies and a dollar made stronger by Federal Reserve hints of a hike in interest rates during the week.
Meanwhile, the Australian Industry Group-Housing Industry Association’s performance of construction index showed activity expanded for a third straight month, driven by the fastest pace of growth in apartment building on record.
The index added 0.2 points to 52.1 in October to remain above the 50-point level separating expansion from contraction.
Meanwhile, investors are awaiting the US jobs report that could support the Federal Reserve increasing interest rates.
The Labor Department’s October report is expected to show job growth strengthened to 181,000 new payrolls from September’s 142,000 reading.
