Australian shares set a new seven-week low this morning as caution prevailed despite an overnight rebound on Wall Street.
At lunchtime the ASX 200 was trading nine points or 0.2% weaker at 5088 after an early bounce faded and the market decline to its lowest point since December 16. Consumer discretionary and gold stocks +0.6% led a rally in a handful of sectors, including energy +0.3%, IT +0.3% and the Small Ordinaries +0.1%. The defensive health -0.7% and telecoms sectors -0.5% were the worst of the sectors.
Local investors showed little inclination to dive back into the market following a retreat that has stripped nearly 280 points from the benchmark index since January 1. However, the mood may change if US jobs and services data tonight and on Friday exceed expectations.
"Compared to the magnitude of [Monday's US] losses [last night's] relief rally was modest," BK Assert Management's Kathy Lien told Fairfax. "So far, the move in currencies and equities represents nothing more than a dead cat bounce but that can change if ADP and non-manufacturing ISM reports surprise to the upside."
Asian markets proved more willing. Hong Kong's Hang Seng advanced 0.61% and Japan's Nikkei 1.43%. China's Shanghai Composite remained closed for Lunar New Year holidays. Dow futures were recently up three points or less than 0.1%.
Crude oil futures recovered 36 cents this morning, rising to US$97.70 a barrel. Spot gold was $1.30 stronger at US$1,255.40 an ounce. The dollar fell back to 88.97 US cents.
It's a game of patience just now. Not much moving out there, so you have to wait for shares to reach your target buy levels, pick them off and sit tight. Swing traders are having an easier time than breakout traders right now - every style has its season. Two trades here this morning, but both played out well. Caught the first bounce in ACR and really should have taken the second chance as well. Also caught PRY near the low.
