Afternoon trading July 8

Thanks Bowser and morning crew.


Half-time round-up:

Shares retreated from an eleven-year high as a sharp drop in the price of iron ore triggered a bout of profit-taking.

The ASX 200 slumped 73 points or 1.1 per cent to 6678 mid-session, led by declines in commodity exporters. Index heavyweight BHP fell 1.2 per cent to a two-week low. Rival Rio Tinto shed 1.3 per cent.

Today's setback followed a losing end to last week on Wall Street. The S&P 500 eased 0.18 per cent on Friday after unexpectedly strong monthly jobs numbers undermined expectations that the Federal Reserve will be forced to cut its key rate this month to support a flagging economy. The jobs numbers boosted the US dollar and sent most commodity prices lower. The Australian share market, which is weighted towards resource exports, this morning appeared to take its cues from commodity prices.

Iron ore miners rank among the year's best performers, but gave some of those gains back this morning after a Chinese steel official told a conference the Chinese government was investigating the recent steep rise in the price of ore. The spot ore price skidded 5.9 per cent on Friday to $US114.81 a dry ton after hitting a five-year peak last week above $US126.

The local market was ripe for profit-taking at Friday's eleven-year high and today offered no hiding places. The utilities sector sagged 2 per cent, health 1.7 per cent and financials 1.1 per cent. Energy and consumer discretionary were the best of the sectors with losses of 0.3 per cent.

The big four banks tend to move in lock-step and this morning all shed between 1 and 1.1 per cent. G8 Education was the index's worst performer following a broker downgrade, falling more than 10 per cent at one point to a five-month low. Shares in the childcare operator were lately down 9.9 per cent.

What's hot today and what's not:

Hot today: shares in retail franchisor Retail Food Group hit an all-time low late last month following a run of problems, including a franchisee class action and bad press following a parliamentary inquiry into the sector. The share price, which had been as high as $8 in 20175, bottomed at 12.5 cents last month before bouncing sharply as bargain-hunters bet the company will survive its recent strife. Shares today rose 5.5 cents or 32.3 per cent to 22.53 cents.

Not today: there were huge stag profits on offer on Friday for investors who snared a share allocation in biotech Invex Therapeutics. The shares listed at 40 cents and closed the day at $1.075. Part of the attraction was the backing of Andrew "Twiggy" Forrest, chairman of Fortescue Metals. Shareholders were sitting on profits of more than 150 per cent this morning and some cashed out, dragging the price down 10 cents or 9.3 per cent to 97.5 cents.

Asian markets suffered substantial falls. China's Shanghai Composite gave up 2.4 per cent, Hong Kong's Hang Seng 1.8 percent and Japan's Nikkei 0.9 per cent. S&P 500 index futures felt the chill wind, falling 3.7 points or 0.1 per cent.

On commodity markets, Brent crude futures ticked up ten cents or 0.2 per cent this morning to $US64.32 a barrel. Gold futures improved 50 cents or less than 0.1 per cent to $US1,400.50 an ounce.

On currency markets, the dollar was buying 69.9 US cents.

Trading: caught the bounce in CVN, but should have stayed in the saddle a bit longer. Small dabble in PCK. Took a small position in GEM for any recovery following the inevitable 'please explain' request from the ASX. Looks overdone intraday, whatever the broker report said.