Australian shares ignored weak US futures and mixed Asian markets this morning, rallying as the New York Stock Exchange suspended floor trading ahead of the arrival of Hurricane Sandy tonight.
At lunchtime the ASX 200 was 20 points or nearly 0.5% stronger at 4493 with all sectors advancing except health -0.2%. The best sectors were a mix of defensives and cyclicals, including property trusts +0.9%, utilities +1%, energy +0.9% and industrials +0.7%. This morning's rally clawed back around half of Friday's fall.
"There was a sharp sell-off on Friday going into the close that was a bit unwarranted as Australian investors exercised a bit of caution ahead of the weekend," IG Markets private client adviser Stan Shamu told Fairfax.
US futures reflected jitters ahead of the arrival of Hurricane Sandy, the so-called "Frankenstorm" later today. The New York Stock Exchange announced that it will only allow electronic trade tonight after public transport in New York was suspended and parts of the city evacuated. Dow futures were recently down 24 points or 0.2% but above their lows. Read more here.
Asian markets were mixed. Shanghai dropped 0.26%, Hong Kong's Hang Seng lost 0.35% and Japan's Nikkei added 0.19%.
Crude oil futures fell 27 cents this morning to US$85.97 a barrel. Spot gold firmed $2.60 to US$1,714.20 an ounce. The dollar was buying $US1.0356.
Hard to get a clear picture of the outlook for the week because of the way Hurricane Sandy is distorting sentiment in the US (not easy to be bullish when the headlines are sowing fear and worry). Gold is an obvious beneficiary of the uncertainty. In the circumstances, the XJO is holding up pretty well. I've been rewarded lately for concentrating on buying pullbacks in stocks that have broken out or established an up-trend. Added AGS on Friday and MSR this morning with a view to holding for a few days. Couldn't resist VMG for a pure day trade but no advantage there yet.
