A global pullback pushed Australian shares to their lowest level of the month this morning but falls were cushioned by strength in US futures and Shanghai shares.
At lunchtime the ASX 200 was down 27 points or 0.6% at 4265 but faring better than pre-market futures trading suggested. The defensive health, telecoms and consumer staples were the only sectors to advance as resource stocks and small caps bore the brunt of the selling. The Small Ordinaries fell 1.2% versus a 0.6% decline in the S&P/ASX 20. Market heavyweight BHP fell to its lowest level in six months.
The local market's performance compared favourably to much of Asia, Europe and the US where Wall Street suffered its worst session of the year last night and Italy's benchmark share index collapsed nearly 5%.
"There's no question, when you see declines of over 1% across all the major markets, that we are going to open down," Lonsec senior client adviser Michael Heffernan told Fairfax. "The fact that we are, at the moment down, only 0.7% is not a bad effort."
Asian markets were mixed. Japan's Nikkei fell 0.97% and Hong Kong's Hang Seng 1.22%, but Shanghai rallied 0.2% and Dow futures were recently up 39 points or 0.3% after Alcoa's earnings result, released after the close of regular trade in the US this morning, beat expectations.
The Reserve Bank was given further reason for a May cut to the cash rate after another round of gloomy domestic reports this morning. Consumer sentiment dropped to its lowest level in eight months and home loan approvals declined for a second month.
"The time has come for Australia's central bank to move decisively to cut rates by a full half a per cent and for the retail banks to immediately pass it on," Australian Chamber of Commerce and Industry chief executive Peter Anderson told Fairfax. "A quarter of a per cent cut would not be enough to do what is required."
Crude oil futures rebounded 38 cents this morning to US$101.28 a barrel. Spot gold was $6.30 softer at US$1,654.80 an ounce. The dollar was buying US$1.028.
The morning has played out pretty much as hoped - just a pity the initial dump wasn't heavy enough to invite more bottom-picking. I would have done well if I'd done exactly the same as yesterday and bought BRU, KAR, MML and AIO - three wins out of four. Instead I caught THR and MAD at their lows. Trades in AQP and AAX have gone nowhere.
