Australian stocks slumped to a four-week low this morning as a looming deficit battle in Washington sent US futures and Asian markets lower.
At lunchtime the ASX 200 was off 32 points or 0.8% at 4144 after earlier hitting its lowest level since October 21. Property trusts was the only sectors to trade positive as the big miners led a broad market decline.
Asian stocks fell for a fifth straight session as US futures pointed to a weak start to the trading week. Japan's Nikkei dropped 0.24%, Shanghai 0.37% and Hong Kong's Hang Seng 2.28%. Dow futures were recently down 87 points or more than 0.7% as the clock ticked down the deadline for a congressional committee to reach agreement on a plan to cut the US budget deficit.
"There's likely to be a continuing impasse and people will focus on the stability of the US politically," Tim Schroeders of Pengana Capital in Melbourne told Bloomberg. "People will probably sit on the sideline and wait for clarity."
Crude oil futures fell another 56 cents this morning to US$97.23 a barrel. Spot gold was $7.90 weaker at US$1,716.90 an ounce. The dollar was buying 99.65 US cents.
Looks like we have an answer to my speculation this morning as to whether the market would care about another US deficit stand-off. Apparently it cares quite a lot. I began adding a few short-term holds on Friday on speculation that Wall Street was about due a short-term bounce and our market was close to major support. Can't say that's worked out too well but I'll give it a couple of days to come good. In the meantime, I took a couple of stabs to pick the turn in MGX this morning and caught a bounce in KCN.
