Australian equities dipped on Wednesday for their third loss in four sessions, as weak commodity prices, overnight selling and mixed manufacturing data from China weighed on listless trade ahead of the Easter long weekend.
The benchmark S&P/ASX 200 Index closed down 31 points, or 0.5 per cent, at 5860.8, while the broader All Ordinaries Index dropped 29 points to 5832.9.
Wednesday's drop came a day after the market closed on the best quarterly performance in 24 years. Both indices had climbed about 9 per cent in the first three months of 2015.
The market was down from the opening bell after a global sell-off on Tuesday night undermined domestic momentum. Analysts noted that new equity futures contracts in the US point to continued weakness on Wall Street after the S&P 500 managed a mere 1 per cent rise over the first quarter. Also on Tuesday night, Britain's FTSE 100 benchmark suffered a 1.7 per cent decline, while the Stoxx Europe 600 slipped by 0.6 per cent.
Local selling on Wednesday was driven by this flatter global sentiment, mixed signals on US monetary policy and continuing concerns about the impact of China's slowdown on mineral prices and the Australian economy. The bearishness also came despite mounting bets that the Reserve Bank of Australia will cut the cash rate to 2 per cent as early as its April policy meeting on Tuesday.
China's official manufacturing purchasing managers' index, the bellwether of large industrial firms, rebounded into expansionary territory in March at 50.1, from 49.9 in February. However, the HSBC flash PMI, focusing more on private-sector small and mid-sized companies, fell to 49.2 in March, the lowest level since April last year.
China's slowdown has weighed heavily on iron ore and other commodity stocks of late.
But Pengana Capital's Ric Ronge said resource shares might be oversold in the rush to find yield.
"You can find good stories even in a tough environment," he said. "Since the financial crisis, investors have moved into income assets and that's been the right call, but there's been a massive repricing and one has to ask if it's still the right call?"
"Such a strong repricing in industrials coupled with resources being pushed down so far has meant the relative yield between industrials and resources has closed."
There was another drop, of 2.5 per cent, in the spot price for iron ore landed in China, to $US51.35 a tonne. That is the lowest since 2004-05, based on data from Metal Bulletin and annual benchmarks compiled by Clarkson, the world's largest shipbroker.
Westpac Banking Corp in a note forecastthe price could fall to as low as $US47 a tonne.
Resources giant BHP Billiton on Wednesday lost 2.2 per cent to $30.34, while competitor Rio Tinto dropped 1.4 per cent to $56.41. Fortescue Metals Group eased lost 3.3 per cent, to $1.90.
Local data releases on Wednesday included the Australian Industry Group manufacturing PMI figure for March, which rebounded to 46.3 from February's 45.4, where readings below 50 indicate contraction. Meanwhile, CoreLogic's home price reading for the past month grew at 1.4 per cent – the fastest in eight months - while building permit growth slowed at a more moderate pace than expected.
Commonwealth Bank of Australia slipped 0.1 per cent to $93.32 and Westpac Banking Corporation dropped 0.5 per cent to $39.18. ANZ Banking Group was off 0.5 per cent at $36.45 and National Australia Bank by 0.3 per cent to $38.43.
Telstra Corporation lifted 0.3 per cent to $6.33. Qantas Airways added to recent gains with another 2.2 per cent jump to $3.19.
The biggest food and liquor sellers also sold off, with Wesfarmers, owner of Coles Supermarkets, down 0.9 per cent at $43.55. Woolworths dropped about the same, to $29.20.
The spot price of gold rebounded about 3.4 per cent to $US1187.02 per ounce. However, Australia's biggest gold producer, Newcrest Mining still lost 1.7 per cent $13.14.
Telecommunications was the best-performing sector, up 0.4 per cent, while materials was the worse, shedding 1.9 per cent for the day.
Resources group Western Areas was the worst-performing stock in the ASX 200, plunging 7.6 per cent to $3.30.
Mining services group Bradken was the best performer, climbing 5.2 per cent to $1.94.
