Australian shares retreated this morning as a slowdown in China's manufacturing sector did little to improve the mood after the US Federal Reserve downgraded its economic outlook.
At lunchtime the ASX 200 was down 27 points or 0.7% at 4104 with all sectors except the defensive consumer staples (+0.3%) and property trusts (+0.2%) trading in the red. Energy stocks fell hardest, losing 2.1% after West Texas crude hit an eight-month low overnight. The declines came after the Fed extended its Operation Twist bond program overnight but slashed its GDP expectations for the year.
"Markets had been hoping for a little bit more from the Fed," Stan Shamu, market strategist at IG Markets, told Bloomberg. "Sentiment has really slumped after the lower growth forecast."
The latest manufacturing data from China had minimal impact on the market when released at 12.30pm EST. HSBC's "flash" purchasing managers' index eased from a final May reading of 48.4 to 48.1 this month.
US futures fell away as falls in Chinese and Hong Kong equities overshadowed a bounce in Japan as a softer yen boosted exporters. Japan's Nikkei rallied 0.96% while Shanghai lost 1.32% and Hong Kong's Hang Seng dropped 0.75%. Dow futures were recently 32 points or 0.25% in the red.
Spot gold sagged another $5.20 this morning to US$1,601.20 an ounce. Crude oil futures were unchanged at US$81.06 a barrel. The dollar was buying US$1.0167.
Geez, this is a tough market. Volumes are dreadful and safe trades few and far between. I'm reduced to hazarding marginal positions in the likes of SEK and WOR on pullback - the sort of thing I'd leave alone if I could find better. We never knew how good we had it in 2007, lol.
