Sell off, what sell off, as futures show a rise after yesterday’s slide.
What we seem to have had yesterday was a bit of a one day wonder, or more accurately, a part day wonder as the bears popped up and mauled the bulls for a few hours, only to vanish overnight.
As a result here’s going to be a very sharp reversal of market form and sentiment in Australia today after yesterday’s sell off failed to carry on into overnight trading.
In fact other markets in Asia and the US completely ignored the Australian slide and the reason for it – a reported crackdown on iron ore import financing by the Chinese financial authorities.
The Aussie dollar also ignored the story and again rose to close to 93 US cents – a good indicator of how little impact the Australian 49 point market slide had.
The dollar eased to less than 92.70 in early Asian trading.
And, more importantly, the overnight trading in the share price futures contract had our market up 22 points at the opening later this morning.
The rise in the futures market came off the back of another solid night of trading in offshore markets – especially on Nasdaq in the US which was up more 0.7%, with the Dow and the S&P up by around half a percent.
It was a very positive end to trading in the US as internet and biotech stocks were mostly higher.
Gold edged lower by a couple of bucks an ounce, but oil was up a touch, but dipped in early Asian trading.
Yesterday saw a rise of around 23 points on the futures market, and the market opened cautiously higher and then fell in late morning as the reports about the crackdown appeared.
No helping locally was a sell off in the big banks – just after the ANZ, Commonwealth and Westpac hit a series of new all time highs.
A 27 point gain in the futures market tells us traders reckon bank share prices will resume rising when trading starts later today.
The sell off from late morning yesterday ended the seven day streak of gains for the local market.
The ASX200 dropped 49.5 points, or 0.9%, to 5486.6 and the All Ordinaries was down 49.2 points, or 0.9% to 5466.9.
Resources and financials suffered heavy losses, down 1.1% and 0.8% respectively.
Iron ore prices slipped a further 2.2% to $US108.40 per tonne, adding to the 4.7 per cent fall last week.
The price fell on concerns of that crackdown on financing deals using iron ore as collateral.
As a result, Rio Tinto fell 1.2% to $61.30, BHP lost 0.7% to $37.61 and Fortescue finished more than 2% lower at $5.
Among the banks, National Australia Bank and Westpac both fell 1.3%, to $35.51 and $35.39 respectively. ANZ dropped 1% to $34.60, while Commonwealth Bank was down 0.6% at $78.94.
Helping push the banks lower were a couple of recommendation changes from big banks. For example Citi downgraded its recommendations for Westpac to ‘neutral’ and NAB to a ‘sell’, while Morgan Stanley said it sees a 70-80% t chance that NAB will fall in the next 60 days.
ANZ releases its interim profit tomorrow, while NAB and Westpac are due to report their profits next week. Macquarie’s full year figure is out on Friday.
