Australian shares suffered their biggest setback in at least two weeks this morning as the market belatedly responded to three days of selling in the US.
At lunchtime the ASX 200 was 78 points or 1.3% lower at 5895 and heading towards its worst return since a 78-point pullback on March 9. A broad pullback left no sector unscathed, with the heaviest blows falling on the health sector -1.7%, consumer discretionary -1.5%, property trusts -1.5%, industrials -1.5% and materials -1.5%.
The retreat came after a three-day sell-off in the US accelerated overnight, forcing local investors to take notice after two days of rallying against the overnight leads.
“Wall Street is struggling to add to its recent record high and it looks like the upward momentum is starting to show signs of fatigue,” Matthew Sherwood, head of investment markets research at Perpetual, told Bloomberg. “Asia has an advantage over the US as Asia has cheaper valuations. What’s weighing on Asia is the performance of the Chinese economy, which is facing some growth road blocks.”
China's Shanghai Composite lost 0.06%, Hong Kong's Hang Seng 0.22% and Japan's Nikkei 1.75%. Dow futures were recently off seven points or less than 0.1%.
Crude oil futures rallied 56 cents this morning to US$49.77 a barrel. Spot gold was 30 cents weaker at US$1,196.70 an ounce. The dollar was buying 78.18 US cents.
Oil is rallying as Saudi Arabia escalates the growing crisis in Yemen. Next global flash-point? US dollar has bounced and Aussie fallen in a typical 'flight to safety'. At this stage, seems likely to be a sideshow but may provide an excuse to push equities lower in the days ahead. Trading: a successful morning despite Endless's dastardly efforts to trade me out of business. Pretty sure he pinched the 6.5 cent AZK shares I tried to buy this morning to fund my retirement. Also to buy shoes for the kids (anyone hearing violins yet?) I got over that setback with nice swing trades in MND, NUF and SYR, all of which looked ripe at their lows. SWM is offering fairly straight-forward bounce trades lately - also took that. Only dud was IPL, which is wallowing like a hippo. Let CVT got this morning because of the strength of the rally into the announcement.
