ASX 200 drops despite China’s economy beating expectations

The Australian sharemarket slipped on Friday, despite a positive boost for the country’s commodity sector on the back of results out of China.

The ASX finished down on Friday. Picture: NewsWire / Max Mason-Hubers

The Australian sharemarket slipped on Friday, as a pullback by the major banks offset gains across most of the market.

The benchmark ASX 200 index fell by 0.20 per cent or 16.60 points to close Friday’s trading at 8310.40 points. The broader All Ordinaries was down 11.70 points or 0.14 per cent to finish the week at 8557.40 points.

The Aussie dollar was trading near US61.97c.

The ASX finished down on Friday. Picture: NewsWire / Max Mason-Hubers

In a mixed day on the market, nine of the 11 sectors finished in the positive, but the overall index still dragged lower due to large falls in the financials and telecommunications sectors.

The big four banks gave back much of their gains from Thursday’s rally, with ANZ being the weakest down 1.77 per cent to $29.45.

NAB fell 1.74 per cent to $37.78, Westpac was down 1.53 per cent to $32.16 and CBA slipped 1.19 per cent to $153.90.

Telecommunications shares made up of media and entertainment were among the major losers on the ASX. REA Group slipped 2.71 per cent to $230.12, while CarSales was down 1.04 per cent to $38.19 and Seek slumped 1.25 per cent to $22.05.

In positive news for Australia’s major miners, China’s economy surprisingly bounced on Friday.

China statistic bureau said GDP growth accelerated to 5.4 per cent year-on-year for the December quarter, up from 4.6 per cent in the September quarter smashing consensus of 4.0 per cent growth.

Industrial production growth accelerates to 6.2 per cent on-year for December versus expectations that it would remain at 5.4 per cent, while retail sales growth jumps to 3.7 per cent from 3 per cent, also beating a consensus estimate of 3.5 per cent.

AMP chief economist Shane Oliver said China was able to beat its target of “around 5 per cent” due to additional policy stimulus measures.

Australia’s market responded positively to a stronger than expected Chinese economy. Picture NewsWire/ Gaye Gerard.

“Export and import growth picked up in December with front loading ahead of Trump tariffs likely helping exports to the US. Money supply and credit growth also picked up,” he said.

“All up there are signs that policy stimulus is helping and this is good news for Australian exports to China.

“But more likely needs to be done to help the Chinese consumer and particularly if Trump is aggressive with tariffs.”

Iron ore futures ticked up on the back of this with China’s Dalian Commodity Exchange ended morning trade 1.27 per cent higher at 800 yuan ($A176) a metric tonne, the highest since December 17.

The benchmark February iron ore on the Singapore Exchange rose 0.31 per cent to $US103 ($A166) a tonne.

Fortescue metals soared 1.75 per cent to $19.22 while BHP gave back much of its gains during the afternoon session to close marginally higher up 0.18 per cent to $40.05. Rio Tinto slummed 0.73 per cent to $118.74 after a rumoured merger with Glencore.

In company news Megaport share price is up 10 per cent to $7.52, after a buy recommendation from Morgans.

Similarly, Lovisa was one of the best performing shares on the ASX 200 on Friday, up 7.72 per cent to $29.28 after Morgan Stanley issued an “overweight” rating on the business.

Originally published as ASX 200 drops despite China’s economy beating expectations