The S&P-ASX 200 index recovered from a three-week low of 4388 points to close at 4400.9 points, down 1.2%, while the All Ordinaries finished 1.3% lower at 4422.4 points after telecoms giant Telstra dipped more than 8% after reporting a 4.7% plunge in annual profit and forecast flat revenue and lower operating earnings in the year ahead.
Despite today’s dip, the Australian market outperformed Wall Street, where the Dow Jones Industrial Average slipped 2.5% to 10,378.83 points overnight and the S&P 500 fell 2.8% to 1089.47 points.
The fall on Wall Street followed news the US trade gap had widened sharply in June to the highest level in 20 months on the back of rising imports.
According to the US Commerce Department data, the $US49.9 billion trade gap was larger than the $42 billion posted in May, compared to an expected June deficit of around $42.2 billion.
Meanwhile, Australian employment rose 23,500 in July although the unemployment rate rose unexpectedly to 5.3%. This compared to economist predictions of a 20,000 increase in total employment and the unemployment rate to hold at 5.1%, according to an AAP survey.
Onto resource stocks and BHP Billiton ended today’s session A34c lower at $39.64, while Rio Tinto dipped $1.27 to $69.82.
Australia’s third-largest iron ore miner Fortescue Metals Group fell 17c to $4.32, OZ Minerals was down 3.5c to $1.165 while Paladin Energy was down 11c to $3.84.
On the London Metal Exchange, all base metals traded lower last night. Copper for three-month delivery was down 1.4% to $US7200 per tonne, nickel shed 2.3% to $21,695/t and zinc fell 2.3% to $2037/t.
An unnamed Singapore-based trader told Dow Jones Newswires that selling pressure was pretty weak today given the equity sell-off overnight.
"This kind of minor sell-off will flush out some of the weak longs and attract some bears, but in the medium term, it will turn around and we will head back up. I'm bullish into the year end," he said.
Spot gold was last trading at $US1198.87, up 92c, at 4:16pm AEST. Newcrest Mining fell A39c to $33.85, Lihir Gold was down 2c to $4.21 and Kingsgate Consolidated had shed 19c to $9.63.
Finally, Foreign Minister Stephen Smith has reportedly said Chinese concerns about a proposed profits-based tax on mining companies had largely subsided.
"Since we have made very substantial changes to the mining tax, those concerns have in my view substantially fallen away," Dow Jones Newswires quoted Smith as telling reporters today.
"We think this is a sensible, fair return on the one-off use of Australian resources which will also enable us to put significant infrastructure into Western Australia and Queensland that will be of benefit to the Australian minerals, petroleum and resources industry, including foreign investors who come from China as they do from elsewhere," he added.
Smith’s comments come on the back of a report released by Canadian think tank the Fraser Institute which said Australian states were losing their attractiveness as mining destinations due to the federal government’s recent tax grabs.
