Australian stocks erased last week's modest gains as signs of disunity in Europe and tensions in Asia weighed on regional markets and US futures this morning.
At lunchtime the ASX 200 was 28 points or 0.6% weaker at 4380 as a sinking tide lowered all sectors except defensive health stocks +0.4% and property trusts +0.3%. The falls were heaviest among resource stocks, despite rallies in oil and most metals on Friday. Gold stocks eased 2%, energy 1.5% and metals & mining 1.6%.
Asian markets started the week on the back foot as a territorial dispute between China and Japan simmered and European leaders disagreed on the weekend over the urgency for banking union. Shanghai fell 0.86%, Hong Kong's Hang Seng 0.52% and Japan's Nikkei 0.65%. Dow futures were recently down 25 points or 0.2%.
"A period of consolidation in the month ahead looks the more likely outcome," George Boubouras, head of investment strategy at UBS's Australian wealth management unit, told Bloomberg. "In Europe, there will continue to be some lingering challenges. As we approach the end of the quarter, investors will fine-tune and adjust their portfolios across all the asset classes. This will include some profit taking and portfolio rotation."
A "risk off" morning saw oil tumble more than a dollar and gold more than US$15. West Texas crude futures was lately off 99 cents this morning at US$91.97 a barrel. Spot gold was $14.60 softer at US$1,760.20 an ounce. The dollar lost around a third of a cent, recently buying $US1.0418.
Risk assets in retreat this morning - equities, oil, gold, the Aussie dollar. Shanghai plumbing new multi-year depths and getting close to the psychologically significant 2000 level. No cause for panic yet - the market could use a pullback to recharge the batteries. Plenty of volatility this morning. SIR was an opportunity but I was too far down the buy queue. Caught lows in KDR and MAT and squeezed a pip out of IAU.
