Another day, another fall on Wall Street and another weak opening for the local market. The rollercoaster continued overnight with another triple digit fall the Dow.
The S&P 500 also fell and Nasdaq lost ground, while small caps, the real weak point of the current US market, also fell.
European markets were mixed to weaker, but Asian shares had a solid day yesterday. That will come under pressure today.
That all sets us up for a weak start today, especially with another 1% drop in world iron ore prices to $97.50 overnight.
Yields on Italian and Spanish government debt rose sharply as investors abandoned high yield stocks and retreated to the safety of US, German and UK government securities.
The key US 10 year bond yield saw its yield fall to 2.51% from 2.54% on Monday, which was a real indicator of the reappearance of investor fears about risky investments.
US shares fell after weak trading figures from some retailers (shares in a major sporting goods retailer fell 18% after downgrading its outlook) and a surprisingly weak sales report from industrial giant, Caterpillar.
That showed big falls in mining equipment sales, especially in Asia (where Australia is located and major market), where there was a 70% slide in April sales from a year ago.
Staples, a big office supplies company, saw its shares lose more than 12% because of a weak quarterly report, while a slew of other retail stocks fell by 5% or more.
The Aussie dollar dropped nearly a cent to trade around 92.40 this morning in early Asian trading
Our market looks like starting with a noticeable loss of more than 20 points when trading starts this morning, according to the overnight trading on the share futures contract.
Once again, the Wall Street performance illustrates how the local market here seems to be out of sync.
Our market struggled back into the green yesterday afternoon, despite weak iron ore prices and the growing realisation that the economy is going to slow further in 2014.
The S&P 500 lost 12.25 points, or 0.7%, to end at 1,872.83.
The Dow shed 137.55 points, or 0.8%, to end at 16,374.31. The Nasdaq lost 28.92 points, or 0.7%, at close the day on 4,096.89.
The Russell 2000 index, which covers small cap stocks on Wall Street had the biggest percentage fall of all – it was down 16.53 points, or 1.5% at 1,097.90
Gold was steady at just under $US1,300 an ounce and oil traded at just over $US102 a barrel in New York.
The ASX200 and the All Ords both added 11.4 points yesterday or 0.2%, after an early half a per cent slump.
Telstra stood out with a 0.8% rise to a nine year high of $5.30.
Treasury Wine Estates, also helped lift the index with an 18% jump on news of the bid from buyout group, KKR.
The big banks also helped the market with three of the four posting modest gains.
The Commonwealth Bank rose 0.3% to $79.83, ANZ Banking Group was up 0.3% as well to $32.75, and National Australia Bank lifted 0.5% to $33.10. But Westpac fell 0.3% to $33.68.
ASX newbie, Genworth Mortgage Insurance Australia soared 13.2% on listing to end at $3. It was priced at $2.65 a share.
And despite the slide in iron ore prices, the big miners were mixed. BHP Billiton rose 0.05% to $37.45, while Rio Tinto slipped 0.08% to $60.05.
There smaller rival, Fortescue Metals Group jumped 3.9% to $4.54 after it reported higher reserves in a major iron ore deposit in the Pilbara.
