Thanks Gttrain. Half-time round-up:A sell-off in Australian...

Thanks Gttrain.

Half-time round-up:

A sell-off in Australian shares accelerated sharply this morning after the Reserve Bank flagged possible further rate cuts, undercutting the dollar and yield stocks.

At lunchtime the ASX 200 was off 47 points or 1% at 4778 and on track to give back all of yesterday's gains, plus more. Property trusts +0.8% was the only sector to rally as investors dumped financials -1.3%, consumer staples -1.4%, utilities -0.9% and telecoms -0.6%. Resource sectors were already under pressure following overnight declines in several commodity prices.

The market was in the red before the 11.30am EST release of the minutes from the last RBA meeting fuelled further downlegs in equities and the dollar. The central bank said "conditions in the non-mining business sector remained subdued" and weak inflation left the door open for further rate cuts, if required. Read more here. The dollar sagged around a third of a cent to US95.23.

"Traditionally, the exchange rate has reflected lower interest rates," ANZ foreign exchange strategist Andrew Salter told Fairfax. "Because policy is being very closely tied, at the moment, to the exchange rate and its depreciation, we're getting an even closer correlation than normal."

Asian markets retreated as tomorrow night's Federal Reserve policy statement continued to cast a pall over money markets. Shanghai eased 0.27%, Hong Kong's Hang Seng 0.67% and Japan's Nikkei 0.7%. Dow futures were recently down five points or less than 0.1%.

Crude oil futures crawled three cents higher this morning to US$97.94 a barrel. Spot gold was 20 cents firmer at US$1,384.70 an ounce.



Seems we're in one of those looking-glass market phases where what would normally be good news (possible rate cut) is for the time being a negative because a falling dollar drives international money out of the market. In other words, while the Yanks are panicking that interest rates might rise, our market is fretting that they might fall. It's a screwy world. I had one of those mornings where I seemed to work pretty hard for not much return. Had wins in SGH and PIR, but both would have been better with some patience. CDU, on the other hand, is currently giving me a nasty paper cut. Been in the right place with LYC, BBG, FKP but too far down the buy queue each time.