Afternoon trading Jan 31

Thanks Oscar and morning crew.


Half-time round-up:

Shares clawed back early losses but remained on track for their first losing month since September after Wall Street logged its worst two-day dive since 2016.

The ASX 200 dipped briefly back below 6000 before turning its deficit into a gain of three points or 0.1% at 6026 at the session's halfway point. The Australian index slumped more than 50 points yesterday as a collapse in US equity futures pointed to a rough session on Wall Street. Overnight US stocks fell hard for a second night, the Dow losing 1.37% and the S&P 500 1.09%.

"High flying equity markets are falling back to earth as the reality sets in that global central banks are preparing to trim their bloated balance sheets and will finally begin to drain the party's punch bowl," Stephen Innes, APAC head of trading at OANDA told Fairfax. "Investors fearing the possibility of interest rates rising more quickly than expected has stoked concerns of an extended equities market purge."

US equity futures staged a cautious recovery this morning. S&P 500 futures were recently up 4.75 points or 0.17%. Declines on Asian markets were modest following yesterday's pre-emptive retreat. China's Shanghai Composite was off 0.14%, Hong Kong's Hang Seng 0.08% and Japan's Nikkei 0.13%.

January has been a disappointment for Australian traders, with the excitement of a fresh ten-year high in the first week giving way to a downward drift despite a string of record highs in the US. At current value, the ASX 200 looked set to end the month with a loss of around 50 points, breaking a three-month win streak.

Crude oil futures gave up another 58 cents or 0.9% this morning to US$63.92 a barrel. Gold futures inched up $2 or 0.15% to US$1,342 an ounce. The dollar was buying 80.68 US cents.



These are the first global market jitters in a while. Problem is everyone thinks asset prices in the US are over-inflated and due for correction, but no one wants to be first to leave a roaring party. It's a game of chicken because being first out leaves you looking like an idiot if asset prices continue to inflate. Nonetheless, all eyes are on the exits. The VIX ticked up overnight to its highest level in quite some time but remains at a level that would be considered benign in days gone by. The ASX took its medicine yesterday in anticipation of what came overnight, therefore did not have far to fall today. The 6000 level once again offered good support. Trading: busy first hour trying to sort the opportunities from the traps. Wins in partial recoveries in ASN, ANW, RFX and SCT.