Heavy falls in resource stocks pushed the Australian stock market lower this morning as Asian markets reacted to Wall Street's second worst night of the year.
At lunchtime the ASX 200 was down 43 points or 1.05% at 4044 and on track to close little changed for a third straight week. An overnight slump by commodities into a technical bear market drove gold stocks down 3.4%, metals & mining 2.5%, materials 2.1% and energy stocks 2.2%. The defensive telecoms sector +0.8% was the morning's only riser.
The retreat followed a bleak 24 hours of economic news from Asia, Europe and the US which fuelled sharp falls in the US last night.
"The data shows a continuation of a trend of deteriorating data out of the US," the chief market strategist at City Index in Sydney told Bloomberg. "Traders and investors need to conserve capital. I wouldn't be buying equities at the moment. You have to be cautious. The market's now caught in a rip current and I don't recommend trying to fight it."
US futures were cautiously positive after ratings agency Moody's cut the credit ratings of several US banks by less than the market expected. Dow futures were recently up 23 points or 0.2% as Morgan Stanley, Bank of America, Citigroup and Goldman Sachs all advanced in after-hours trade. Read more here.
Asian markets played catch-up with overnight falls in Europe and the US. Japan's Nikkei dropped 0.53% and Hong Kong's Hang Seng lost 0.97%. Shanghai was closed for a bank holiday.
Crude oil futures rebounded 50 cents this morning to US$78.60 a barrel. Spot gold continued to slide, losing another $2.30 at US$1,563.60 an ounce. The dollar was buying US$1.006.
A few hopeful signs amid the gloom this morning - US futures and oil are both modestly ahead. I had a moan yesterday about how tough it is to trade at present and that's reflected in the diminishing participation here in the day trading forum. Just want to say that if you're still here, you're surviving one of the toughest markets you'll ever face and it will stand you in very good stead when conditions improve. I normally do well on days like these but it seems to me that most of the "loose money" has been shaken out of the market and all that is left is shorts and institutional selling. I had small wins in PGI and MML but I'm flat in NMG and another goldie that's so thinly traded I'm ashamed to identify it - show's how desperate and dateless I was this morning, lol.
