Earnings disappointments from Rio Tinto and ANZ helped drag the Australian market off yesterday's four-and-a-half year high as Asian markets fell back.
At lunchtime the ASX 200 was four points or 0.1% weaker at 5032 as gains in three out of four of the big banks offset declines in the big miners. Rio Tinto skidded 2.3% as traders reacted to the miner's first net loss, reported late yesterday. ANZ was the only bank to lose ground after this morning announcing a $1.36 billion profit that fell just short of expectations.
"There is a risk of a correction, but it may be shallow," David Cassidy, head of equity strategy at UBS in Australia, told Bloomberg. "A lot of the sentiment indicators look overbought. We're seeing some tentative signs that earnings downgrades have stopped for now, which is good, but that could be temporary. People aren't positioned for this rally and they are still scrambling to buy. So I wouldn't be getting too bearish on equities right now."
Asian markets retreated following a weak night in Europe and a flat session in the US. Hong Kong's Hang Seng dropped 0.36% and Japan's Nikkei lost 0.91%. Shanghai remained closed for the Lunar New Year public holiday. Dow futures were recently off six points or less than 0.1%.
Crude oil futures dropped seven cents this morning to US$97.30 a barrel. Spot gold was $2.10 weaker at US$1,632.40 an ounce. The dollar was buying $US1.0358.
Easy to convince yourself you're a genius when trading conditions are this generous. I had one of those happy mornings where everything turned to gold. Two good bounce trades in the first half hour in SAI and AWC and then RXL delivered the goods to round off a splendid morning. Still, geniuses generally know what day of the month it is, so I'm not getting carried away.
