Afternoon trading March 5

Thanks Oscar and morning crew.


Half-time round-up:

Aussie shares fell from a six-month high amid speculation that global markets have become overextended on the promise of a US-China trade deal.

The ASX 200, which yesterday recorded its strongest close since September, today declined 37 points or 0.6% to 6180. The retrace followed a losing night on Wall Street where analysts questioned whether a trade deal was now fully factored into current share prices.

Equity markets around the world have enjoyed a spectacular start to the year amid signs that the US and China are close to resolving their trade dispute. However, technical traders say markets - particularly in the US - now look overbought and ripe for a retrace. Overnight, the S&P 500 slipped 0.39% and the Dow Jones Industrial Average a heftier 0.79%. US index futures remained mildly depressed this morning, S&P 500 futures lately down 3.25 points or more than 0.1%.

Here, the change in mood was reflected across most sectors. Materials lost 0.9% as BHP fell 1.2%, financials 0.8% with all four big banks off at least 0.5% and industrials 1% as Spark Infrastructure traded without its dividend.

Supermarket group Metcash, which operates the IGA brand, rose 5.1% to a three-month high following a positive outlook from analysts at UBS. The group yesterday pledged $100 million to modernise its stores to compete more effectively with Coles and Woolworths. That was enough to boost the consumer staples sector 0.6%.

With earnings season over, company news was thin, but there was a steady flow of economic data for traders to parse. Services activity contracted for a second month during February. The Australian Industry Group's gauge came in at an anemic 44.3, well below the 50-point level that separates expansion from contraction. 

The current account deficit narrowed more than expected last quarter, falling 33% to $7.2 billion last quarter from $10.7 billion the previous quarter. However a decline in exports took some of the shine off the news, with economists predicting the downturn could take as much as 0.2 percentage points off tomorrow's GDP figures.

Today's big-ticket item is due at 2.30pm Eastern Standard Time, when the Reserve Bank releases a revised rate outlook and any change to the cash rate. With speculation mounting that the next move in rates may be down, traders will examine the rate statement carefully for any change in bias.
 
Asian markets followed Wall Street lower. China's Shanghai Composite shed 0.1%, Hong Kong's Hang Seng 0.5% andJapan's Nikkei 0.4%.

Crude oil futures gave back some of their overnight gains, lately down 14 cents or 0.25% at $US56.45 a barrel. Gold futures were steady at  $US1,287.20 an ounce. The dollar was buying 70.83 US cents.

Looking ahead over the next 24 hours, there is little of note on the economic calendar overseas, but tomorrow brings quarterly GDP figures here and a speech by Reserve Bank Governor Philip Lowe.

 

 

Trading: missed SMX and avoided RMP (a terrific overnight hold but fighting elevated expectations here). Fished around and traded off the lows in a couple of midcaps: FXL, ASL. Not wildly profitable, but a solid wage.