Shares hit a three-and-a-half week low this morning amid Euro-gloom before paring losses ahead of this afternoon's Reserve Bank rate decision.
At lunchtime the ASX 200 was down 43 points or 1.05% at 4098 but 26 points off the morning low set in the first hour of trade. Gold was once again the only sector to trade positive, rising 0.4% as cyclical stocks copped the worst of the selling after heavy falls in Europe overnight. Energy stocks fell 1.8%, industrials 1.5% and materials 1.3%
"It's the European disease that is infecting markets all around the world at the moment," Michael Heffernan, senior client adviser at Ausstock Group told Fairfax. "Until they sort themselves out, I think the market's going to be on drip-feed all the time... The American market, while it didn't trade last night, its futures markets don't look too healthy so we haven't got too many green flags waving for us at the moment."
US futures continued to point to a negative start to tonight's trade following yesterday's Labor Day public holiday. Dow futures were recently down 247 points or 2.2%.
Asian markets retreated, but the falls were much more moderate than last night's bloodbath in Europe. Japan's Nikkei lost 1.23%, Shanghai 0.51% and Hong Kong's Hang Seng 1.09%.
Analysts lowered expectations for tomorrow's quarterly GDP figures following news this morning of a larger-than-expected trade deficit in the June quarter. The current account deficit of $7.419 billion exceeded the median market forecast of a $7.1 billion deficit and will knock around 0.5% off tomorrow's GDP figure, the ABS said.
Crude oil futures rallied 31 cents this morning to US$83.94 a barrel. Spot gold was recently at US$1,900.20 an ounce. The dollar was buying US$1.0522.
Good to see the ASX 200 respect the August 22 low. The index had a look below this morning and bounced. Also good to see Asian markets reasonably resilient to last night's European falls. Been a very satisfying morning following buys in EGP and LLC shortly after the open and LEI near its low. Only disappointment was LNC, which stalled on the blocks.
