The Australian share market gave back more than half of yesterday's gains this morning as risk appetite across the region was tested by fresh signs of debt stress in Europe overnight.
At lunchtime the ASX 200 was off 47 points or 1.1% at 4140 with all sectors losing ground. The resources sector, which had enjoyed big advances over the first two sessions of the new trading year, was among the biggest sufferers this morning, sending materials down 1.5%, energy 1.5% and gold 0.9%.
"We're back on the same merry-go-round of risk on and risk off," Burrell Stockbroking adviser Jamie Elgar told Fairfax. "The real test will come next week when more of the usual market players come back from holiday."
The market had a reminder ahead of the opening bell of the mixed pace of the domestic economy as a report showed the services sector continuing to contract last month. The AIG/CBA Performance of Services Index improved by 1.3 points to 49, below the 50-point mark that separates contraction from expansion. AI Group director of public policy Peter Burn attributed the weakness to "continued wariness on the part of households, some of which reflects the lack of progress in resolving the European sovereign debt issues, together with softness in domestic house prices."
A separate report showed the trade surplus narrowed in November. The surplus of $1.418 billion was much smaller than the $2 billion tipped by economists.
Asian markets were mixed. Japan's Nikkei fell 0.57% but Shanghai reversed initial losses to rise 0.07% and Hong Kong's Hang Seng rallied 0.23%. Dow futures were recently off eight points or less than 0.1%.
Crude oil futures eased 11 cents this morning to US$103.16 a barrel. Spot gold was 30 cents stronger at US$1,613.30 an ounce. The dollar was buying US$1.0325.
Bit of sobering up going on in the market this morning after a fairly giddy start to the year. Perversely, I find it easier to make money during pullbacks than on big up-days, so found plenty of action among the mid-caps this morning. CAB was the pick of the bunch. Squeezed a few points out of TCL and am narrowly ahead in EGP and CPB. Scalped PBT for half a pip.
