Australian shares joined a regional sell-off this morning, with resource stocks and small caps hit hardest.
At lunchtime the ASX 200 was down 71 points or 1.5% at 4790 after earlier touching the index's lowest level this month. All sectors were trading lower, with the defensive sectors telecoms (-0.4%) and property trusts (-0.6%) performing best and metals & mining (-2.1%), energy (-2.2%) and materials (-2%) the worst. Blue chips outperformed small caps, with the ASX 20 down 1.4% and the Small Ordinaries off 1.8%.
"People are nervous when they see the US down 140 points," the Director of equities at RBS Morgans, Bill Chatterton, told Fairfax. "The materials sector is the one that has run really well and people have made a lot of money in it, so that's going to be the first area people are looking at."
US futures followed Asian markets lower this morning. Dow futures were recently down 42 points or 0.35%. Japan's Nikkei fell 1.49%, Shanghai 1.7% and Hong Kong's Hang Seng 1.41%.
The RBA reaffirmed its outlook for the Australian economy this morning with the release of the minutes from the last board meeting. The bank said it expected global economic growth to remain "around trend pace, or a little higher" despite rising inflation and moderating growth in China.
The dollar continued its overnight slide as currency traders abandoned "risk assets" for safer havens. The Aussie was recently buying US $1.0473, nearly a cent lower than yesterday's local close.
Crude oil futures eased another 78 cents this morning to $106.77 a barrel. Spot gold was $5.80 weaker at $1,490.80 an ounce.
No real surprises this morning - it usually takes the market a couple of days to absorb a shock like the US credit downgrade, so an index bounce was always unlikely. Wouldn't be surprised if we fall further this arvo. Been a mixed morning at this trading desk. Had wins in ALK, ROC, WAF, CRJ and MKO but hope for more from PIR and suffered from a bad case of positive expectancy with AGO (one of my favourite traders, so I piled in long before any sort of buy signal).
