Australian shares ended slightly lower on Monday on poor corporate earnings and fresh data from China that underlined a further slackening of demand in Australia's top export market. Banking and mining stocks gave up some gains made earlier in the session on expectations of stimulus measures by the United States and China to bolster recovery in the world's two biggest economies.
The benchmark S&P/ASX 200 index ended 0.1 percent lower at 4,343.7 points, according to the latest data. The index fell 0.8 percent on Friday. China's industrial sector posted a sharp profit drop in July, a fresh sign that slackening domestic and external demand has further weighed on corporate earnings, prompting calls for policy easing to underpin the slowing economy.
Disappointing earnings reports from Australian transport company Toll Holdings and surfwear maker Billabong added to the negative sentiment on the Australia bourse. Toll Holdings fell 0.9 percent to A$4.51 after it reported a 5.8 percent fall in annual profit before one-offs on Monday, falling to A$274 million from A$291 million a year earlier.
Billabong initially dipped 2.2 percent on Monday before recovering to be up 0.4 percent at A$1.35 after posting a collapse in second-half profit. Shares in the group have fallen 75 percent over the past 18 months. New Zealand's benchmark NZX 50 index traded relatively flat, rising 0.02 percent to 3,623.2 points.
"I think it's really down to what we're seeing on the Shanghai composite at the moment to be honest," said Chris Weston, institutional trader at IG Markets. "It seems to be dragging everyone down." Shanghai shares tumbled to their lowest since March 2009 on Monday, dragged by non-banking financials whose sagging fortunes are dependent on a more aggressive policy easing regime, which now seem unlikely.
Earlier, markets were cheered by US Federal Reserve Chairman Ben Bernanke's remarks to a Congressional panel late last week there was scope for further action by the Federal Reserve to ease financial conditions and strengthen recovery. Results in the banking sector were mixed with Australia and New Zealand Banking Group Ltd droping 0.3 percent, National Australia Bank Ltd falling 0.6 percent, and Commonwealth Bank of Australia losing 0.5 percent. Westpac Banking Corp however, gained 0.1 percent.
In the resources sector, BHP bucked the trend, falling 0.2 percent, while Rio Tinto gained 0.6 percent. Sundance Resources soared 7.5 percent, after saying it had accepted a lower take-over offer worth A$1.37 billion ($1.42 billion) from China's Hanlong Group. Whitehaven Coal also surged, up 6.2 percent, making up some ground lost on Friday when mining magnate Nathan Tinkler walked away from a $5.5 billion bid to take the company private.