Australian shares surrendered yesterday's gains as news of a trade surplus failed to offset caution ahead of this afternoon's Reserve Bank rate decision.
At lunchtime the ASX 200 was 25 points or 0.5% in the red at 5130 as falls in financials -1.2%, industrials -0.1% and defensive sectors outweighed a bright morning among resource stocks. The gold sector rallied 2.6%, metals & mining 2.2% and energy 0.8%. The consumer staples sector tanked 2.5% after Coca-Cola Amatil warned that first-half earnings were likely to be lower than expected.
An unexpected $307 million trade surplus in March did little to lift spirits after another decline in construction activity and weak growth in house prices over the first three months of the year. Exports increased by 1% in March, while imports declined 1%.
The contraction in construction activity accelerated last month. The AIG/HIA Performance of Construction Index slumped 3.8 points to 35.2, the index's 35th straight month below the 50-point level that indicates expansion. A separate report showed capital city house prices increased by 0.1% in the first three months of 2013, well below the 1.8% rise tipped by economists.
Asian markets were positive, with Japan roaring back from a public holiday. Shanghai shook off early weakness to advance 0.26, Hong Kong's Hang Seng added 0.13% and Japan's Nikkei jumped 2.84%. Dow futures were recently down 15 points or 0.1%.
Crude oil futures reversed five cents this morning to US$95.78 a barrel. Spot gold was $3.80 softer at US$1,465.40 an ounce. Copper for July delivery rebounded two cents to US$3.32 a pound. The dollar was buying $US1.0241.
The market seems to have slowed down a lot over the last few weeks, despite a brief and highly selective revival in spec interest last week. I'm finding trades harder to come by and less lucrative when they arrive. Can't complain too much about this morning - GDY came good from yesterday and I got a pip out of GUF and a good win in WPG (my favourite sort of trade - big dumper kept moving a sell order lower to meet the market, so I placed a buy at the bottom of the "dump range" and got an entry at the low when the seller dropped the lot.) Holding some GFF from 71 - looks like traders expect no rate cut this arvo. Finally, just a note that I'll be posting a truncated version of the pre-market wrap tomorrow due to a longer early-morning bike ride. Work-life balance and all that!
