Australian shares hit a two-week low this morning before paring falls as Asian markets and US futures rallied and reports showed subdued inflation and a rebound in retail sales.
At lunchtime the ASX 200 was trading 15 points or 0.3% lower at 5541 after earlier falling to 5524. Gold +0.5%, consumer staples +0.5% and property trusts +0.5% were the pick of the sectors. Energy -0.7%, health -0.7%, IT -0.6% and financials -0.5% brought up the rear.
Consumer inflation eased to an annual rate of 2.6% last month from 3% in June, according to a TDS-MI gauge. The monthly measure crept up by 0.2%, not enough to prevent a significant drop in annual growth during what is traditionally one of the strongest months of the year as annual fees for utilities and other costs increase at the start of a new financial year. The trimmed mean favoured by the Reserve Bank also fell to 2.6% from 3%.
Retail sales increased by a seasonally-adjusted 0.6% in June, the first growth in three months following a 0.3% contraction in May and a flat reading in April. Growth in job advertising on the internet and in print media moderated to 0.3% last month following an increase of 4.4% in June.
"Labour demand has continued to improve this year," ANZ chief economist Warren Hogan told Fairfax. "Over the past six months, each of the main job ads measures has strengthened, although the pace of the upswing remains quite moderate compared to previous turnarounds in the labour market."
Asian markets shrugged off Friday's losses on Wall Street. China's Shanghai Composite advanced 0.75%, Hong Kong's Hang Seng 0.32% and Japan's Nikkei 0.03%. Dow futures were recently up 46 points or 0.3%.
Crude oil futures bounced 31 cents this morning to US$97.93 a barrel. Spot gold was $2.30 softer at US$1,291.90 an ounce. The dollar was buying 93.25 US cents.
A much more hopeful morning on the ASX than Friday's toboggan ride. Mondays tend to be more optimistic than Fridays - everyone has done their research and two days seems to be long enough to erase the memory of whatever it was that drove the market down 1.4% last time it traded. Asia looks bullish but I wouldn't read much into those US futures - they were about the same level this time on Friday. Decent morning's trade here - took something out of MAT, AWE and NWT from the lows.
