Australian shares hit their lowest level in a month as Asian markets retreated and a slump in the price of iron ore dragged on producers.
At lunchtime the ASX 200 was down 33 points or 0.8% at 4270 after earlier touching its weakest point since August 6. BHP and Rio Tinto were the biggest weights, dropping 2.2% and 2.6%, respectively, after China's benchmark iron ore price yesterday recorded its cheapest price since October 2009. The falls helped pull the metals & mining and materials sectors down 2.3%. Health +2.3% was the top pick on a morning when defensive sectors, including utilities and property trusts, provided the only advances.
A regional index declined for a fifth day, its worst losing run in eight weeks, as Asian markets pulled back. The MSCI Asia Pacific Index was recently down 0.9%, Shanghai 0.08%, Hong Kong's Hang Seng 1.08% and Japan's Nikkei 0.83%. Dow futures were off 24 points or 0.2%.
"The macro backdrop is quite challenging and growth conditions are fragile," Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors told Bloomberg. "Last night, you got the disappointing US manufacturing number, and the market is getting nervous about going into the ECB meeting. There.s a lot of speculation on the ECB about what they will do."
GDP missed expectations but not by enough to alarm economists. The economy grew 0.6% per cent in the June quarter and 3.7% for the year. Pre-release expectations had been for quarterly growth of around 0.8%.
"It's a touch slower than what we're thinking, mainly because consumption was a bit lower than what we were expecting," NAB chief economist Alan Oster told Fairfax. "I think the economy will probably slow in the second half."
Crude oil futures eased 14 cents this morning to US$95.31 a barrel. Spot gold was $5 weaker at US$1,693.50 an ounce. The dollar was buying $US1.0214.
Risk assets off a bit this morning. Carnage among anything exposed to iron ore. I've had success these last few weeks in picking lows, but today has been a rougher ride so far. Modest profits taken in GBG and BCC. Still holding AAX, BKN and SDL.
