A decline in exports and slump in Chinese services activity helped drive Australian shares to a two-and-a-half week low following a third day of declines.
At lunchtime the ASX 200 was trading 18 points or 0.3% lower at 5522 as falls in cyclical sectors outweighed gains in select defensives. Health stocks rallied 1.3% and utilities 0.1%. Gold stocks dived 1.5%, metals & mining 0.8%, industrials 0.6% and financials 0.4%. At its lowest point today, the benchmark index was 126 points off last Thursday's six-year high.
The market accelerated its fall following news that China's services sector stalled last month, recording its weakest reading in the nine-year history of HSBC's private survey. The services PMI fell to 50 last month from 53.1 in June.
"The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities as property related activity, such as agencies and residential services, see less business," HSBC's China chief economist Qu Hongbin told Fairfax. "Today's data points to the need of continued policy support to offset the drag from the property correction and consolidate the economic recovery."
The morning's domestic data was mixed. A gauge of services activity in Australia rose to 49.3 last month from 47.6 in June, just below the 50-point level that divides contraction from expansion. A separate report showed exports declined 2% in June and the trade deficit widened to $1.6 billion from $1.1 billion as the value of key commodities declined.
Asian markets fell back following the Chinese services disappointment. China's Shanghai Composite eased 0.2%, Hong Kong's Hang Seng 0.02% and Japan's Nikkei 0.24%. Dow futures were recently down 11 points or 0.1%.
Crude oil futures edged up four cents this morning to US$98.40 a barrel. Spot gold was 20 cents lower at US$1,288.10 an ounce. The dollar was buying 93.2 US cents.
Interesting to see if the market can put in any sort of recovery this arvo. There was obvious buying at yesterday's XJO lows and if the recent trend holds we should see something similar today. Of course, there is an RBA rate decision/statement due at 2.30pm but the only intrigue there is likely to be any change to the wording. The spec end of the market has been growing increasingly gnarly lately. I've been ducking and diving and got something out of TON, TPT and BUX. Also took CWN and DJW at the open on the basis they looked marginally overdone at the time. Both paid off, although CWN has since fallen away. More recently moved into SER and TLG. Biggest worry is MML which has not bounced enough for a decent pay day.
