Australian shares skidded to a five-week low as the dollar cracked US $110 and sentiment towards miners was undermined by heavy selling in precious metals and oil this morning.
At lunchtime the ASX 200 was off 20 points or 0.4% at 4802 after earlier touching the index's lowest level since late March. Resource stocks and small caps again bore the brunt of the selling, with gold stocks down 1.2%, energy stocks 1.4%, the Small Ordinaries 1.2% and metals & mining 0.6%.
The price of silver collapsed in thin trade this morning before partly recovering. The spot price tumbled 12% in 11 minutes this morning, according to MarketWatch. Spot silver was recently trading at US $43.37 per ounce, compared to Friday's closing level of $47.94. Gold also pulled back, recently trading US $11.80 or 0.7% weaker at $1,543.90 an ounce. Crude oil dropped $1.18 or 1% to US $112.74 a barrel.
The Australian dollar pushed through US $1.10 this morning but pulled back as the session wore on. The Aussie touched US $1.1011 around 10.30 am and was recently trading at US $1.0964.
"The surging $A is becoming a severe dampener on Australian earnings growth and so as long as it keeps surging the Australian share market is likely to remain a laggard compared to US shares," AMP Capital chief economist Shane Oliver told Fairfax.
The strong dollar continued to weigh on manufacturing last month, with activity contracting for the seventh month in the last eight. The AIG/PWC manufacturing index inched 0.5 points higher last month to 48.4 but held below the 50 level that separates contraction from expansion.
Several Asian markets were closed this morning, but Japan's Nikkei rallied 0.97%. Dow futures were recently at +59.
Big recovery in our market in the last half hour and a surge in US futures on claims that Osama Bin Laden is dead. Choppy old session but plenty of bounce opportunities - personally I love it when the market is volatile, but you can tell from the volumes on this thread that participation at the spec end is flagging. Traded bounces in BDI, ABY, ALK, HOR and APA. Still holding AYN, AKM, ELT and a few ABY.
