Sliding resource stocks and a weak round of domestic economic reports weighed on the share market despite overnight gains in the US and on regional markets this morning.
At lunchtime the ASX 200 was off 20 points or 0.4% at 4787 with gold shares (-2.1%), materials (-1.2%) and metals & mining (-1.3%) hardest hit.
"It's quite surprising and disappointing really when you see all the overseas markets flashing green, as most of them were," Austock Securities senior client adviser Michael Heffernan told Fairfax. "What I think has put the wet blanket on the market is the major resources stocks, which are getting hit pretty hard today."
Consumer confidence sagged to its lowest level since last July and home loans dropped for the first month in seven in January, according to separate reports released this morning. The WBC-MI consumer confidence index dropped 2.4% and is now 11.3% down on a year ago. Home loans fell 4.5% in January but analysts attributed the falls in large part to floods in Queensland, where loan demand crunched 16%.
"The housing market in Queensland pretty much ground to a halt," JP Morgan economist Ben Jarman told Fairfax. "If you strip out Queensland, it's down 1.7% for the month. We don't think this decline is the start of an inflection point."
Asian markets improved following a positive overnight lead from Wall Street. Japan's Nikkei rallied 1.01%, Shanghai 0.3% and Hong Kong's Hang Seng 0.79%. Dow futures were recently at +2.
Crude oil futures eased 22 cents this morning to $104.54 a barrel. Spot gold was $2.60 weaker at $1,426.40 an ounce. The dollar was buying US$1.0081.
Disappointing morning - expected the big banks to prop us up today and I didn't expect the miners to fall quite as hard. Plenty of volatility in the small caps creating scalping opportunities. I've been in and out of AVQ, AYN WWW and FML. Still holding CRE and FWD and waiting for the sellers to exhaust themselves - both look overdone and the rising volume suggests capitulation.
