Declines in resource stocks kept the Australian share market underwater during a directionless morning on regional markets.
At lunchtime the ASX 200 was trading 15 points or 0.25% weaker at 5631 and at risk of closing in the red for the first time in eight sessions. A 1.3% decline in the metals & mining sector was the biggest weight on the market after iron ore dropped to a two-month low last week. Gains in energy +0.6% and utilities +0.5% helped cushion the retreat.
The earnings season continued to reward winners and punish losers. Among today's best-received profit updates were announcements from QUB, CTX, PFL and WSA. In the doghouse were BSL, REC, UGL, SIV and NXT. With the earnings season three weeks old and with two-thirds of companies having reported, UBS said it was cautious on the near-term outlook for share-price appreciation.
"Some strong large cap share price rallies have seen the industrials ex financials P/E expand to 17.5x forward EPS,” UBS strategists wrote in a note to clients quoted on Fairfax, declaring a "somewhat cautious near term view from current levels” because “a lot seemingly rest on the superficial attractiveness of dividends versus current interest rates”.
Asian markets were mixed. China's Shanghai Composite and Hong Kong's Hang Seng both lost 0.45%. Japan's Nikkei gained 0.2%. Dow futures were recently up 32 points or 0.2%.
Crude oil futures eased 12 cents this morning to US$93.53 a barrel. Spot gold pared sharp early losses to trade $2.80 lower at US$1,278 an ounce. The dollar was buying 93.14 US cents.
The XJO put in a couple of 'toppy'-looking candles at the end of last week and looks like following through today. However, there is some chunky US economic data due later in the week that will likely dictate whether or not a retrace develops - durable goods and GDP are of particular note. Iron ore has been losing altitude for a few weeks and is getting towards levels that get the headline-writers interested. I passed on several marginal opportunities that would have paid out this morning. Nailed one - COF on retrace for a day's wage.
