Australian stocks skidded to a two-week low this morning as miners were hit by lowered demand expectations after China downgraded its growth target.
At lunchtime the ASX 200 was off 40 points or 0.95% at 4222 after hitting levels last seen on February 20. IT +1% was the only sector to advance on a morning when the big miners dragged the metals & mining sector down 2.2% and materials 2.1%. Gold stocks fell 1.6% and energy stocks 1.3%.
"There’s been a risk-off sentiment overnight," HiFX senior dealer Dan Bell told Fairfax. "Equities are weaker across the US and Europe, commodities are down and the Aussie dollar has followed suit."
The current account deficit blew out last quarter as resource prices softened. The deficit rose more than economists predicted, from $5.82 billion in the third quarter to $8.37 billion, the Bureau of Statistics said today. The median estimate from economists in a Bloomberg News survey was for a short fall of $8.05 billion. A separate report showed government spending increased by 0.9% in the fourth quarter. The reports prompted some economists to increase their expectations for this week's fourth-quarter GDP report.
"Whilst net exports were fairly close to our initial forecast, [they] still indicate a 0.1 percentage point upside to fourth quarter GDP," 4Cast economist Celeste Tay told Fairfax. "Together with stronger ABS data on government spending in the fourth quarter - government investment posted a stronger 1 per cent quarterly gain than our forecast of 0.5 per cent - we have made the decision to revise our fourth quarter GDP call higher."
Asian markets continued yesterday's pullback. Japan's Nikkei fell 0.5% this morning, Shanghai 0.67% and Hong Kong's Hang Seng 1.28%. Dow futures were recently down 11 points or 0.1%.
Crude oil futures were little changed, rising four cents this morning to US$107.08 a barrel. Spot gold was $2 weaker at US$1,704.80 an ounce. The dollar was buying US$1.0659.
Feels like the mood of the market has deteriorated over the last week or two. Not much interest in the pre-market thread here this morning and trading volumes have been falling away over the last few days. Global markets have run pretty hard, even if the XJO has been trailing far behind like the laziest kid in school. Plenty of pullbacks this morning but not much snap. MNM was the pick of them for me but I also had small successes in SPT and MMR. Also had a first dab at FAR and WDC. Watching PEK and ARV.
