Positive US futures following a possible budget breakthrough failed to lift Australian shares this morning as the big banks and defensive sectors lost ground.
At lunchtime the ASX 200 was nine points or 0.2% in the red at 4573 as shallow gains in resource stocks, industrials and small caps were dwarfed by declines elsewhere. Gold stocks were hit hardest, sliding 2.6% as a rally in the US dollar pressured gold.
The falls came despite a generally bright morning in Asia as US traders anticipated progress in fiscal-cliff negotiations over the weekend. Reuters this morning reported that Republican House Speaker John Boehner has opened the door to increased taxation on people earning more than US$1 million a year.
"Boehner's offer to allow tax rates to go up for taxpayers earning over $1 million fundamentally transforms fiscal cliff negotiations," a policy analyst at Eurasia Group told Reuters. "The political burden is now shifted back to the president, who must be willing to take on his party in order to get a deal Boehner can ultimately pass."
Dow futures were recently up 27 points or 0.2%. Shanghai extended Friday's gains, rising 0.74%, Hong Kong's Hang Seng slipped 0.1% and Japan's Nikkei piled on 1.61% following a weekend election.
Spot gold slumped $5 to US$1,692.50 an ounce this morning as the prospect of a fiscal cliff deal encouraged US traders to abandon traditional havens. The dollar was buying $US1.0549. Crude oil futures rallied 12 cents to US$86.93 a barrel.
A pretty bullish session elsewhere although US futures have faded since the Reuters report first hit. Not sure why the XJO is reluctant to follow Asia and US futures higher. Perhaps scepticism that there is much upside left to the fiscal cliff drama after a four-week rally. I had one of those increasingly rare but happy mornings that deliver a good wage in the first half hour, firstly with AVQ from Friday and then a couple of rides on SLR. Just missed IGR at 48c.
