A second morning of gains on the Australian share market faded by lunchtime as a tepid session on Asian markets weighed on US futures.
At 1pm the ASX 200 was off 9 points or 0.2% at 4063 after earlier advancing as much as 38 points. Telecoms +0.9% topped sector gains, ahead of property trusts +0.3% and utilities +0.2%.
Trading across the region was subdued ahead of tonight's conference call between German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou. Investors also await the outcome of US Treasury Secretary Tim Geithner's meetings with EU finance ministers later this week.
"Geithner will warn his counterparts that any form of default threatens to precipitate a Lehman-type event and with global not just euro-zone specific ramifications," strategists at BNP Paribas told MarketWatch. "As long as Greece continues to show willingness to take its medicine and jump through hoops when demanded of it, then funds will be forthcoming and default avoided."
US futures eased as Asian markets traded mixed following news that the Asian Development Bank has slashed growth forecasts for the region. Japan's Nikkei fell 0.2% in morning trade, Shanghai lost 0.06% and Hong Kong's Hang Seng gained 0.3%. Dow futures were recently off 48 points or 0.4%.
Consumer confidence rebounded this month as the threat of interest rate rises abated. The WBC-MI Index of Consumer Sentiment improved 8.1% to 96.9 after last month collapsing to 89.6, its lowest level in more than two years.
"Concrete evidence of the improved outlook for interest rates came shortly after the August survey when the major banks actually lowered their fixed rate mortgage rates," Westpac chief economist Bill Evans told Fairfax. "This action would have comforted anxious households."
Housing starts decreased by another 4.7% last quarter, according to new Australian Bureau of Statistics figures. The fall brought the total year-to-June decline to a seasonally-adjusted 18.6%.
Crude oil futures dropped 47 cents this morning to US$89.42 a barrel. Spot gold was $1.50 stronger at US$1,839 an ounce. The dollar was buying US$1.0288.
The XJO is just repeating the pattern of the last few weeks: when it hasn't been dropping like a stone, the index has struggled to hold onto early gains on up-days, which suggests a shortage of buyer follow-through. The candle chart tells the story. I'm sticking to intraday trades for now, and could only find one so far in COH when it first bottomed around $55. Patience is key in these conditions.
