Australian shares this morning turned negative for the week as Asian markets responded to the latest worries about European borrowing costs.
At lunchtime the ASX 200 was off 15 points or 0.4% at 4288 after a mid-morning rally ran out of steam. Telecoms +0.4% and health +0.7% were among a handful of sectors to buck the trend. Uranium stocks rallied after Prime Minister Julia Gillard announced she will push to allow sales of uranium to India.
Most Asian markets drifted lower after overnight weakness in European bond sales highlighted ongoing worries about the euro-zone's ability to service its debts. Japan's Nikkei fell 0.39% and Hong Kong's Hang Seng 0.67, but Shanghai recently turned positive, up 0.06%. Dow futures were recently up 5 points or less than 0.1%.
"Bond tenders in Italy last night just underscore that investors are not going to pay too much to risk at this stage, given the prevailing uncertainty," Tim Schroeders of Pengana Capital in Melbourne told Bloomberg. "You have to remain steadfast and disciplined in looking for opportunities when the market gets hysterical either on the buy side and sell side, not get caught up in day-to-day noise."
The dollar firmed a little this morning after the minutes from the last Reserve Banks meeting gave few clues to future interest rate movements. The minutes said "a more neutral" cash rate was appropriate following a recent slowdown in inflation. The dollar was lately buying US$1.021.
"The Aussie has climbed a little bit mainly on the realisation the RBA is playing a wait-and-see game with monetary policy as opposed to making any commitment in its statement to extensive easing," Rochford Capital director Thomas Averill told MarketWatch.
Crude oil futures regained 17 cents this morning at US$98.25 a barrel. Spot gold was $1.30 softer at US$1,780.30 an ounce.
Some bullish signs this morning despite the overall market weakness: a nice sector rally in uranium and stag profits in the debut of CCJ. Can't recall the last time an IPO rallied 100% on its first day. I'm still finding trading volume and falling volatility a problem. Scalped CNX this morning and took IPL for any arvo recovery.
