Afternoon trading Jan 11

Thanks Oscar and morning crew.


Half-time round-up:

Shares gave up the last of their gains for the new year as a second day of selling followed a soft close on Wall Street.

The ASX 200 dropped 33 points or 0.5% to 6064, a point below where the index closed out 2017. Five days of modest gains since the start of the year have evaporated in two days of solid selling amid concerns that a global pullback is pending. The main culprits this morning were IT stocks -1.2%, health -0.9%, financials -0.5% and materials -0.4%. Gold stocks +1.1% bucked the downtrend.

Unexpectedly strong November retail sales boosted the dollar but did little to stem equity selling. Data showed sales jumped 1.2%, three times as much as the market expected. The dollar popped around a third of a cent to 78.79 US cents.

Overnight, the S&P 500 in the US shed 0.11% as traders mulled signs of rising tensions with China over the Trump administration's protectionist stance. Bloomberg reported that China may retaliate by reducing or ceasing buying US treasuries.

“I would think that China is flexing its muscles as the United States is looking into measures to deal with its trade deficit with China,” Daisuke Uno, chief strategist at Sumitomo Mitsui Bank in Japan, told Reuters.“I have been expecting rising trade frictions between the United States and China this year. It appears China is quick to touch the Achilles heel of the States.”

Dow futures were recently ahead 20 points or 0.08%. China's Shanghai Composite gave up 0.24%, Hong Kong's Hang Seng 0.02% and Japan's Nikkei 0.43%.

Crude oil futures eased four cents or 0.06% this morning to US$63.53 a barrel. Gold futures fell 60 cents or 0.05% to US$1,318.70 an ounce.


The local market seems to be pre-empting a global downturn that has yet to eventuate. We've seen this a lot over the years. Often looks like the XJO is running around crying the sky is falling, while European and US markets glide serenely upward. Interesting to see how this one plays out. No doubt that valuations are stretched in the US, but the market will surely want to see how the Trump tax cuts play out. Trading: straightforward morning clipping tickets in ATC, AEB and ZNO. AVL not yet come good.