A plunge in resource stocks steered the share market towards its biggest decline in more than a month after copper fell another 2% this morning.
At lunchtime the ASX 200 was 49 points or 0.9% weaker at 5412 as the metals & mining sector slumped 4.2%, materials 3.6%, gold 3.2% and energy 0.8%. The market has not lost more than 30 points in a session since February 4. Consumer discretionary +0.4% and health +0.3% were the best of the sectors.
The declines followed a stream of bad news out of China in the last few days, including weak exports data and a corporate default, interpreted by some as a signal that the government will no longer stand behind companies with bad debt. Copper was lately down four cents or 1.4% at US$3.04 in US trade after earlier falling at least 2% following a drop of more than 4% on Friday.
"China's weaker-than-expected export number will heighten market sensitivity," Ric Spooner, chief market analyst at CMC Markets, told Bloomberg. "The situation in Ukraine is also a background factor that’s likely to see some trader caution at the moment. Markets are still respectful of the fact that the situation remains very unstable."
The major Asian markets all declined. China's Shanghai Composite lost 1.36%, Hong Kong's Hang Seng 1.46% and Japan's Nikkei 0.92%. Emini Dow futures were recently down 33 points or 0.2%.
Spot gold dropped $8.80 this morning to US$1,330.70 an ounce. Crude oil futures retreated 27 cents to US$102.42 a barrel. The dollar was buying 90.41 US cents.
Plenty of opportunities to damage your trading account this morning. I waited until nearly 11am before starting to buy some of the beaten-up resource stocks but still copped a hiding. Got some FMG away at a profit but could use a few more pips for the rest. Underwater on ARI, SFR and SIR. Should have been quicker to snatch profits in these conditions. Unusual to see the market's "biggest losers" list crowded with as many large/mid caps. Copper is starting to bounce from a low of $3.02, which may help overall sentiment.
