Australian shares pared early gains this morning as most Asian markets ignored solid leads from Wall Street and stimulus hints out of China.
At lunchtime the ASX 200 was up 13 points or 0.3% at 4362 after earlier running as high as 4375. Telecoms -0.1%, utilities -0.2% and energy -0.3% were the only sectors left behind by a broad rally. Risk appetite was strong, with small caps outpacing the blue chips and oil and gold both on the rise - the Small Ordinaries rallied 0.7% versus a 0.2% rise in the S&P/ASX 20.
Asian markets deteriorated as the morning advanced. Japan's Nikkei advanced 0.34% but Shanghai fell 0.98% and Hong Kong's Hang Seng lost 0.05%.
Dow futures were recently up five points or less than 0.1% as US traders looked ahead to the weekend Jackson Hole Federal Reserve symposium.
"Clearly the chances of further quantitative easing are higher than they were six months ago," George Boubouras, head of investment strategy at UBS AG's Australian wealth management unit told Bloomberg. "The market is looking to Bernanke's speech at Jackson Hole for additional guidance on policy."
Crude oil futures surged $1.42 this morning to US$97.54 a barrel as a tropical storm threatened the Gulf of Mexico. Spot gold was $2.30 firmer at US$1,675.70 an ounce. The dollar was buying $US1.039.
Not a bad morning but China is a worry. There's a limit to how far the ASX can rise while the Shanghai Composite keeps setting new three-year lows. No trades as yet but I'm watching a few for possible EOD buys. I reckon the risk of big overnight falls in the US is limited this week by Jackson Hole on the weekend.
