The market is heading for back-to-back falls for the first time in a month after a mixed start to the earnings season compounded European debt concerns.
At lunchtime the ASX 200 was 24 points or 0.5% weaker at 4883 as falls in the big banks and miners overshadowed skinny gains in consumer staples +0.6% and health +0.2%. The decline followed sharp falls in Europe and the US after a surge in government borrowing costs in Italy and Spain.
"It's a return of worries about Europe," Shane Oliver, head of strategy at AMP Capital Investors, told Bloomberg. "The market got very stretched and was due for a pullback, it was just a question of what the trigger would be. We could still see some further weakness this month."
The domestic earnings season kicked off this morning with mixed fortunes. Shares in Cochlear and Macquarie Bank tumbled at least 3% but toll road operator Transurban rallied on the promise of a bigger dividend.
Asian markets followed overseas peers lower. Shanghai lost 0.46%, Hong Kong's Hang Seng 1.6% and Japan's Nikkei 0.94%. Dow futures were recently up 15 points or less than 0.1%.
The morning's economic news had minimal impact. The trade deficit narrowed as exports increased and imports deteriorated. The deficit was a seasonally-adjusted $427 million on export growth of 3% and a 6% drop in imports.
Services activity shrank for a 12th month in January. The AIG/CBA Performance of Services Index improved by 2.1 points to 45.3 but remained well below the 50-point level that indicates expansion. House prices increased 1.6% last quarter in capital cities.
Crude oil futures dropped another nine cents this morning to US$96.02 a barrel. Spot gold was $1.40 weaker at US$1,673.20 an ounce. The dollar was buying $US1.0445.
Call this a sell-off? The trouble with traders these days is they don't know how to panic. Why, when I started trading we didn't consider it a successful morning unless we'd vomited in the waste bin before lunchtime. During the GFC I used to run screaming naked down the street. 'Til the neighbours put a stop to it. We could learn a lot from the Italians: 4.5%, now that's a sell-off. I had a list of potential buys this morning but the only one that came within coee of my entry target was ASL and that's my only trade so far. ICG should offer trades the rest of the week but I'd like it a little lower first.
