The share market shed two days of gains in 22 minutes this morning before halving its losses as positive US futures offset falls in Asia and a likely deadlock in Italy's election.
At lunchtime the ASX 200 was 35 points or 0.7% weaker at 5021 after bottoming at 4978. Gold was the only sector to resist the tide, rising 1.7%. Yesterday's top sectors, consumer staples and consumer discretionary, led the losses, both sagging 1.2%.
The market's partial recovery came despite confirmation that no party has won a governing majority in Italy's election. An Interior Ministry spokesperson said a pro-austerity centre-left coalition will control the lower house but there was no clear majority in the upper house, leaving the coalition unable to pass legislation.
"Uncertainty about the Italian election result has sparked fears that they may abandon their austerity drive, possibly sparking another bout of volatility in Europe," Matthew Sherwood, head of investment market research at Perpetual Investments, told Bloomberg, adding that "governing and implementing much-needed economic reforms [will be] almost impossible".
Positive US futures helped alleviate the early gloom. Dow futures were recently up 28 points or 0.2%. The Shanghai Composite was down 0.51%, Hong Kong's Hang Seng 0.79% and Japan's Nikkei 1.78%.
Spot gold firmed $4.50 this morning to US$1,597.90 an ounce. Crude oil futures were one cent higher at US$92.35 a barrel. The dollar was buying $US1.0284.
Plenty of buy-the-dip action evident this morning - a bullish sign compared to last Thursday's toboggan ride. You can't place much stock in US futures at this time of the day, but there's a fair chance traders are anticipating that the "Bernanke Put" will rescue the market tonight. The Fed Chairman is due to testify before Congress and has a good record of saying what the market wants to hear. On the negative side, it looks like Cyclone Rusty might land a direct hit on Port Hedland. With opportunities abounding, it feels like I should have done better this morning. Scored bounces in SGP, ALL and ASB (the latter paltry) but missed plenty more entries by a point or two. Watching VOR keenly.
