Regional markets retreated this morning but pared losses as U.S. futures improved and some of the shine came off morning rallies in oil and gold.
At lunchtime the ASX 200 was weaker for a third day, down 40 points or 0.85% at 4734 as unrest in the Arab world raised fears that a surging oil price will fuel inflation in the west.
"The turmoil could shut down the Suez Canal which would have a substantial impact on the oil market by delaying the time it takes for oil to be shipped from the Middle East to Europe and the West," currency analyst Kathy Lien told Fairfax. "If oil prices hit $US100 a barrel, central banks around the world could be forced to tighten monetary policy to avoid runaway inflation expectations."
Inflation accelerated last month as floods in Queensland forced up food bills. The monthly TDS?MI inflation gauge showed the rate of inflation doubled from 0.2% in December to 0.4% last month.
Gold was the only Australian sector to buck the downtrend, rising 1.4% as a modest rally in the spot price of the metal this morning faded to a fall of 90 cents to $1,337.50 an ounce. Energy shares retreated by 0.4% as the price of crude oil rallied again this morning, recently up another 59 cents to $89.93 a barrel, but well off the morning high.
Japan's Nikkei was recently down 1.17% after earlier being down more than 1.6%, Shanghai was flat and Hong Kong's Hang Seng was down 1.3%. Dow futures were recently at -20 but on the improve. The dollar was buying 99.11 U.S. cents.
No real surprises this morning, with our market down less than most after taking some of its medicine on Friday. Gold stocks are outperforming but I though energy might have been stronger. Could be some good entry prices out there today if the civil unrest in North Africa spreads. I didn't get as many orders filled this morning as I like. SRL was the pick, with the price suddenly plunging to a "backstop" order I left for that very eventuality. Also did well in the turnaround in DYL. Gave some back on AGS when it broke support.
