Australian shares were swamped by a broad sell-off that spared no sector this morning as tepid economic growth figures failed to lift market sentiment.
At lunchtime the ASX 200 was 60 points or 1.2% in the red at 4840 and on track for its lowest close since the fag-end of January. All sectors were down for the session, with the heaviest falls coming in gold -3.3%, financials -1.9%, property trusts -1.5% and utilities -1.4%. Metals & mining fell 1.1% and the Small Ords lost 0.8%. The declines followed overnight weakness on Wall Street as US traders fretted about a timetable for the withdrawal of quantitative easing.
"Fed tapering fears are likely to be felt for several months and this is likely to see ebbs and flows in markets," Matthew Sherwood, head of investment market research at Perpetual, told Bloomberg. "The tapering will lay the framework by which markets can prepare to function in a way that is less dependent on central-bank stimulus."
The mood remained gloomy after the 11.30am EST release of quarterly GDP figures that came in just below expectations. The economy grew at 0.6% over the first quarter of the year for annual growth of 2.5%. Economists had been expecting figures of 0.7-0.8% and 2.7%, respectively.
"While the latest figures reflect an increase in consumption boosted by lower interest rates, other data for the second quarter of the year show that business investment and activity is not yet improving," UBS chief economist Scott Haslem told Fairfax.
Most Asian markets wallowed in negative territory. Hong Kong's Hang Seng fell 0.65% and Japan's Nikkei lost 0.25%. Shanghai inched ahead 0.17%. Dow futures were recently off one point or less than 0.1%.
Spot gold rallied $6.10 to 1,405.30 an ounce this morning. Crude oil futures slipped two cents to US$93.73 a barrel. The dollar was buying 96.41 US cents.
The decline on the index is getting towards 400 points without any significant reaction. Very unusual to see the RSI this low. I'm still not game to take on overnight holds but we must be near a counter-trend rally, if only for a day or two. Been a very marginal session at this trading desk. I like to have a few profits banked by this time, but today my only close is in QAN, which offered a couple of pips. HVN and APA are loitering like surly teenagers near my buy price and the big seller in CCV isn't ready to release the pressure yet. No guarantee they will, but Monday's action is either a nice precedent or a set-up for suckers like me...
