Shares backed off yesterday's one-week closing high as the financials and materials sectors flat-lined and Asian markets followed Wall Street lower.
At lunchtime the ASX 200 was 15 points or 0.3% weaker at 5416 and on track for its fifth loss in the last seven sessions. Telecoms +0.3% and IT +0.2% were the only sectors to make headway as the big banks and miners cancelled each other out and gold stocks fell 1.5%, property trusts 1%, energy 0.9% and industrials 0.9%.
"We continue to see a cautious tone in global equities," Stan Shamu, market strategist at IG Markets, told Bloomberg. "A better-than-expected ISM non-manufacturing index [in the US overnight] set the tone for the tapering argument. The bulls are sceptical about adding to long positions as the tapering debate ramps up."
Asian markets drifted south. China's Shanghai Composite lost 0.24%, Hong Kong's Hang Seng 0.17% and Japan's Nikkei 0.19%.
US futures were assisted by supportive comments from a Federal Reserve official this morning. San Francisco Fed President John Williams said stock valuations did not seem unreasonable, despite the major indexes sitting near record levels. Dow futures were recently up 27 points or nearly 0.2%.
"If you look at the valuation of stocks today compared to earnings and dividends and relative to historical averages, it's not obvious that the stock market is overvalued," he said in remarks quoted on MarketWatch. "In fact, a lot of models will tell you that it's undervalued given how strong profits have been."
The trade balance narrowed during September to $284 million from $693 million in August as imports eased by 0.1%. Exports were unchanged. The result was better than the $500 median shortfall predicted by economists. A separate report showed vehicle sales deteriorated for a second month in October, declining by 3.1% from the same time last year.
Crude oil futures bounced 35 cents this morning to US$93.78 a barrel. Spot gold was 70 cents softer at US$1,310.10 an ounce. The dollar was buying 94.94 US cents.
Can't say I like the way the index has levelled off these last two weeks. Distribution phase? Needs a decisive move higher soon to refute. Been an unfulfilling morning at this trading desk. Literally. Couldn't get a complete order fill in any of my three trades. Otherwise I'd be in clover on AQA and to a lesser extent GFF and MRM. Best trade was NFE from yesterday, which bounced hard. Think I mentioned it would likely take a day or two to come good.
