Regional markets traded mixed this morning and US futures declined as caution replaced euphoria after last week's exceptional returns.
At lunchtime the ASX 200 was off 18 points or 0.4% at 4336 but trading well above the morning low of 4316. Qantas was one of the morning's star performers, rising nearly 7% as investors bet that the weekend grounding of the airline's fleet will prove a circuit-breaker in long-running disputes with unions. Shares in ASX rallied more than 1% despite the debut of rival exchange Chi-X this morning.
Japan's Nikkei rallied 0.49%. Shanghai was little changed in early trade at +0.02% and Hong Kong's Hang Seng eased 0.06%. Dow futures were recently down 42 points or 0.35%.
"People will be a little bit hesitant ahead of news flow out of the US this week," Angus Gluskie of White Funds Management in Sydney told Bloomberg. "The first part of this week, the market will be relatively flat and they will be waiting to see where data will turn before a stronger trend takes hold."
A private domestic gauge this morning unveiled inflation well within the Reserve Bank's target band. The TDS-MI inflation gauge edged up 0.1% this month for an annual rate of 2.6%, compared with 2.8% in the 12 months to September. However TD Securities head of Asia-Pacific Research Annette Beacher told Fairfax she expected the central bank to leave the cash rate on hold tomorrow.
"We believe, on balance, the prudent path is to leave the cash rate at 4.75% for now," she said. "...inflation is still likely to drift towards the top of the RBA's two to three per cent target band, implying that slightly restrictive monetary policy should remain in place until the inflation outlook is more benign."
Gold fell sharply this morning. Spot gold was recently off $18.10 at US$1,725.40 an ounce. Crude oil futures dropped 42 cents to US$93.07 a barrel. The dollar was buying US$1.0613.
Big change in the 'feel' of the market over the last few weeks. Happily this now feels like a 'buy the dips' market for the first time in many months. I spent the morning doing exactly that in the likes of FXJ, CSR, SAR and TTS.
