Share struggled for traction during a directionless morning on Asian markets ahead of the resumption of trade on Wall Street this evening.
At lunchtime the ASX 200 was down 21 points or 0.5% at 4308 after surrendering meagre gains early in the session. Financials -1% and industrials -0.7% were the biggest drags on the markets, with various defensive sectors, including health, telecoms and utilities, also losing ground. The gold sector +0.6% and metals & mining +0.7% topped the gains in cautious trade ahead of a European Central Bank policy meeting on Thursday and US jobs figures on Friday.
"It just seems like the market is treading water ahead of the two big market event risks later on in the week," Bell Direct equities analyst Julia Lee told Fairfax. "It looks like we are adjusting for yesterday. For example, yesterday, the banks were up and the miners were down and today we are just seeing the opposite."
The market was rattled early on by news that FMG is cutting jobs and paring its ambitious expansion plans to reflect the recent deterioration in the price of iron ore. The news came as RIO announced plans to cut jobs at its Argyle diamond mine in Western Australia.
Asian markets were little changed despite positive US futures. Shanghai advanced 0.09%, Hong Kong's Hang Seng fell 0.07% and Japan's Nikkei lost 0.09%. Dow futures were recently up 27 points or 0.2%.
The trade deficit tightened last quarter as an increase in exports offset weaker resource prices. The deficit narrowed to $11.801 billion from a revised $12.997 billion in the March quarter, according to ABS figures released this morning. The dollar bounced to US$1.0242 as economists upgraded their expectations for tomorrow's GDP figures to reflect the trade data.
Ratings agency Moody's this morning downgraded its outlook for the European Union, citing concerns about Germany, France, the UK and the Netherlands. Moody's lowered its outlook for EU debt from "stable" to "negative".
Crude oil futures rallied 18 cents this morning to US$97.23 a barrel. Spot gold was $1.50 stronger at US$1,696.40 an ounce.
Bless the ASX, it hates to stray too far without clear directions from Wall Street. A finish around these levels would leave the market little changed from Friday. After a pretty ordinary August, I've been trying to get some discipline back into my trading and have been rewarded accordingly these last few sessions. Today I've been concentrating on low-risk scalps in NWH (three times), BLY and SWM. None have delivered big gains but small and steady adds up if you can find enough of it.
