Daytrading January 11 afternoon

Thanks Brit and morning crew.


Half-time round-up:

The ASX's dismal start to the year continued as gloomy US futures and a sell-off in crude oil and Chinese equities helped push the benchmark index towards a seventh straight loss and a two-and-a-half-year low.

At 1pm EST the ASX 200 was trading 100 points or 2% lower at 4891, its first dip below 4900 since July 2013. At this morning's low, the index had fallen more than 400 points or 7% in seven sessions since its last advance on December 30.

Resource stocks led the retreat, sending BHP to a ten-year low and Rio Tinto to its weakest level since 2009. The metals & mining sector lost 3.7% and materials 3.5%. The energy sector was also hit hard, last down 3.9% after West Texas Intermediate crude oil continued its losing run this morning with a decline of 76 cents or 2.3% to US$32.40 a barrel. The defensive gold sector was alone in making headway, gaining 1.4% as spot gold edged up $2.50 to US$1,107.10 an ounce.

US equity futures hinted at a soft start to a busy week of US corporate earnings. Dow futures were recently off 118 points or 0.73%. S&P 500 futures were down 13.5 points or 0.71%.

A cautious partial recovery on the ASX faded as China's Shanghai Composite pushed into the red. The Composite was last down 1.22% and Hong Kong's Hang Seng 2.48%. Japan's Nikkei was closed for a public holiday.

The current bout of market jitters has been sparked by weak economic data out of China and concerns that the central bank's willingness to let the currency depreciate indicates the outlook is worse than official numbers suggest. Weekend data showed consumer inflation edged up less than expected last month to an anemic 1.6% from 1.5% in November. Economists had predicted a stronger improvement to 1.7%.

“The market is concerned about China’s financial stability, with investors looking for more visibility about how the new foreign-exchange regime is going to work,” Matthew Sherwood, head of investment strategy at Perpetual, told Bloomberg. “People are also quite nervous about the Chinese economic outlook. China is certainly slowing on a very gradual path down. A lot of people are fearing a hard landing is in play, but that’s not our central scenario. There’s a lot of policy ammunition left in China.”

The dollar was buying 69.63 US cents.


I rarely play music when I trade, but Blur's 'Song 2' has been banging through my head this morning. Feels right for these menacing conditions. I suspect we're near a short, sharp global reversal, but I don't have enough conviction to back it with cold hard yet. FWIW, US earnings seasons tend to be market-supportive and I don't see any reason at this point for this one to be any different. The instos have been busily marking down their profit expectations in advance, leaving room for upside surprises. It's a well-worked routine. Trading: clipped tickets in ASB, SPO and CCF. Only misstep is BPT, which is sinking under the soft open in crude.