daytrades may 6 afternoon

Half-time round-up:

Shares have shaken off a weak start for a second day as gains in the big banks offset heavy overnight falls in commodities and softness on regional markets.

At lunchtime the ASX 200 was ahead2 points or 0.05% at 4756 and more than 40 points above a six-week low set in the first 15 minutes of trade. Most sectors rallied, with financials +0.9%, health +1.5% and industrials +0.5% among the leaders.

Resource stocks and small caps retreated after a near 5% slump in an index of commodity prices overnight. Gold stocks fell 1.8%, metals & mining 1.3% and energy stocks 1%. The Small Ordinaries eased 0.2%.

"There are quite a lot of headwinds for the resources stocks," RBS Morgans private client adviser Bill Bishop told Fairfax. "The gold price fell significantly overnight, as did silver, and oil went down enormously. So the market is looking forward and thinking the prospects for growth may be limited. On the other hand, you could say the price of oil coming down should be a plus, but it's going to take a while for the investment community to analyse that and for that to have some effect."

The dollar rebounded after the Reserve Bank this morning hiked its inflation forecast and said further interest rate rises are likely. The central bank predicted underlying inflation will hit 3% by December. The dollar jumped more than a cent to US $1.0727.

"Further tightening of monetary policy is likely to be required at some point for inflation to remain consistent with the 2 to 3 per cent medium-term target," the RBA's quarterly Statement on Monetary Policy stated.

US futures ignored losses on Asian markets, with Dow futures recently trading at +7. Japan's Nikkei dropped 1.82% upon its return from a three-day public holiday. Shanghai fell 0.5% and Hong Kong's Hang Seng 0.52%.

Commodities staged a partial recovery from overnight losses. Spot silver rallied 84 cents this morning to US $35.52 an ounce. Spot gold recovered $15.50 to reach US $1,488.50 an ounce. Crude oil futures bounced 76 cents to US $100.70 a barrel.


A promising morning and a long way from the bloodbath that might have been expected. Looks like the big money thinks our market pre-empted the overnight slump. On the negative side, the dollar got a huge kick out of this morning's RBA statement. I had early wins in ALD, FGL and CRZ before it turned south. MCR provided some mid-morning fun and games - was in and out twice before it stabilised. In line with the thinking of some others here, I took an overnight/short-term position in silver. Got to be short-covering due after a 30%-ish fall. Used one of the local exchange traded funds for the first time - ETPMAG.