Australian shares reversed Friday's gains this morning as oil futures punched towards US$106 a barrel and most regional markets sagged.
At lunchtime the ASX 200 was off 59 points or 1.2% at 4804 as deteriorating risk appetite hit cyclical stocks hardest and left gold as the only sector to make ground. The financial and mining sectors were both down 1.2%.
"It looks like we're set for a negative start to the new trading week, with the Middle East concerns likely to drive market sentiment and confidence for some time yet," IG Markets analyst Ben Potter told Business Spectator.
Crude oil continued the rally that last week drove futures 7% higher. Crude for April delivery added 83 cents this morning to reach $105.74 a barrel. Gold benefitted from another round of "safe-haven" buying, with the price spot rising $5.50 to $1,434.10 an ounce. The dollar was buying US $1.0137.
The morning's economic reports offered a mixed snapshot of the economy, with job ads increasing for a 10th month and construction activity contracting for a 9th month. Job ads rose 1.2% last month but growth halved from January's rate of 2.4%. Construction activity continued to contract last month but at a slower pace than in January. The AIG-HIA performance of construction index improved 4.4 index points to 44.6 points in February, still well below the 50-point mark that separates contraction from expansion.
Most Asian markets followed Wall Street's weak lead from Friday. Japan's Nikkei sank 1.28% and Hong Kong's Hang Seng was off 0.13% in early trade but Shanghai added 1%. Dow futures were recently at -24.
A rocky session, with the XJO deteriorating all morning as oil builds on Friday's gains. Might see a small recovery this arvo but the bears seem very much in control. Just want to repeat for new traders, stop-loss discipline is essential in these conditions because there could be a lot more downside in the weeks ahead. I restricted myself today to a quick in-out in BPO for a day's wage and a few peanuts from a part-fill in FXJ.
