Australian shares gave back most of yesterday's gains this morning after a string of European credit downgrades helped push Asian markets lower.
At lunchtime the ASX 200 was down 33 points or 0.8% at 4252 with all sectors losing ground except consumer staples (+0.4%), IT (+0.2%) and telecoms (flat). The retreat came after ratings agency Moody's this morning cut debt ratings on six European countries: Italy, Spain, Portugal, Slovakia, Slovenia and Malta. The agency also placed France, the UK and Austria on "negative" outlook for possible downgrade.
"Moody's is sort of lagging the other ratings houses here," Shane Oliver, head of investment strategy at AMP Capital told Bloomberg. "The reality is we've been talking about this for so long that it should hardly be a surprise to anybody. But you tend to get negative knee-jerk reactions because that's the way the markets work."
Japan's Nikkei dropped 0.2%, Shanghai 0.29% and Hong Kong's Hang Seng 0.11%. Dow futures were recently off 17 points or 0.1%.
Business conditions and confidence improved last month as recent rate rate cuts took effect. NAB's monthly business survey showed business conditions rising two index points to +2 and confidence up one point to +4.
Crude oil futures eased 13 cents this morning to US$100.53 a barrel. Spot gold was $5.80 weaker at US$1,719.30 an ounce. The dollar was buying US$1.0701.
Moody's announcing these downgrades today sure makes them look like the slowest kid in the class. We should expect rating cuts for Enron, Babcock and Brown and ABC Learning any day now. Speaking of slow kids, I haven't done anything clever this morning. Looking for rebounds in ARG and GUD after post-dividend sell-downs but neither has amounted to much yet. Narrowly ahead in HVN and just got some CSR.
