The Australian sharemarket has weakened slightly in the wake of China’s first rate cut in four years.

The move by China shows how wary the state’s leaders are about the European crisis and its impact on the Chinese economy.

At 3.30pm today, the ASX dropped 1.11% for the day to 4063.10. The All Ordinaries followed suit, falling 1.10% to 4110.80.

This was despite the announcement of good trade figures with Australia’s trade deficit less than expected. New figures showed the deficit was at $203 million in April, compared to $1.282 billion in March.

Qantas stocks continued to plummet after news earlier this week revealed that profit may drop by up to 90% in its full financial year.

The troubled airline dropped another 8.02% today, falling below a dollar. Earlier today, rating’s agency Standard & Poor's said if the price did not improve above a dollar soon they would have to reduce Qantas’s credit rating to BBB.

The Australian dollar dropped slightly to 98.68 US cents.