Shares retreated following weak overnight leads and as the Shanghai Composite this morning extended yesterday's losses.
At lunchtime the ASX 200 was 10 points or 0.2% in the red at 4393 but trading above the morning low of 4383. A change in risk appetite was highlighted by gains in defensive sectors, including health +1.7%, utilities +0.9% and telecoms +0.5%, and declines in cyclicals such as energy -0.9%, materials -0.3% and financials -0.1%.
"We did see a pretty big fall in the China market yesterday, particularly the Shanghai Composite, so it seems like these China growth concerns continue to be a bit of headache for the local market," Stan Shamu, market strategist at IG Markets, told Fairfax. "We've heard pledges [from the Chinese leadership] to support growth targets, but we haven't quite heard how this will actually happen yet, so there's a little bit of uncertainty."
Asian markets traded mixed as Japanese exporters lost ground amid tensions over a territorial dispute with China. Shanghai fell 0.63%, Hong Kong's Hang Seng was little changed at -0.04% and Japan's Nikkei advanced 0.15%. Dow futures were recently up 11 points or 0.1%.
Low inflation leaves the Reserve Bank plenty of room to lower interest rates, according to the minutes from the last policy meeting released this morning. "The current assessment of the inflation outlook continued to provide scope to adjust policy in response to any significant deterioration in the outlook for growth," the RBA said.
Crude oil futures rebounded another 45 cents this morning to US$96.98 a barrel following last night's dramatic plunge. Spot gold was $6.90 weaker at US$1,756.80 an ounce. The dollar was buying $US1.0471.
Pretty much a reverse of yesterday's action, with cyclicals down and defensives up. All a bit lacklustre, which is a fair description of my morning. Spent most of it admiring gift horses without translating admiration into concrete action. Just one trade completed - rode the first post-dividend bounce in TOL.
