Regional equities, U.S. futures, the Australian dollar and oil were all sharply lower this morning as a fresh wave of risk aversion swept global markets.
At lunchtime the ASX 200 was down 123 points or 2.8% at 4325 as investors abandoned equities for the safety of government bonds. The Australian three-year bond futures contract climbed 16 ticks to 95.32 with an implied yield of 4.68%, according to The Australian website.
All equity sectors were lower, with losses heaviest among cyclical sectors such as financials -3.1%, energy -3.2%, metals & mining -3.1 and materials -3.1%. The Australian dollar was down against all major currencies - 0.9% against the greenback and sterling and 1.6% against the yen.
"I think Friday night was really quite key," HiFX senior consultant Tom Averill told Fairfax websites. "If equity markets could have broken out of their recent ranges to the top side then that would have set the tone. The fact that they haven't is indicative of the markets general bearish tone at the moment."
An increase in job ads in May and expanding construction work underlined the resilience of the local economy despite global problems. Jobs advertised rose 4.3% in May, reversing a 1.2% dip in April, according to ANZ's monthly survey. However, May's expansion in construction masked a modest slowdown in growth. The AIG-HIA construction index slipped 2.6 points in May to 53.2, above the 50-point threshold that marks growth.
Asian markets thudded lower. Japan's Nikkei was off 4%, Shanghai 1.4% and Hong Kong's Hang Seng 2.5%. Dow futures were recently at a bearish -94 but off the morning low.
Crude oil futures plunged another $1.41 or 2% this morning to $70.10 a barrel. The spot gold price was off $3.90 at $1,218.10 an ounce.
Tough morning. Just a hint of a bounce developing recently, however I've made little so far, with gains in some of the morning's buys off-set by losses in others. Hindsight says it was a day to snatch profits, rather than trying to let trades develop. Modest gains in AIX and CTX balanced by losses in BXB and WTF (averaged down this morning but currently a long way from a profit. Will likely take some medicine today.)
