So which late slide will worry local investors more today – Wall Street’s last minute slip, or Shanghai’s much bigger slump?
While markets in Asia were mostly higher (our market turned around in late trading to stage a small rise for the day), as well market in Europe, Wall Street slipped in the last few minutes of trading.
That means the Australian market will start with a fall of 20 points or more after trading on the overnight ASX futures market. The Aussie dollar slipped closer to 72 US cents.
Oil, gold and copper led commodities lower as well – gold’s fall of $US11 (to around $US1,167) was notable and will impact local miners, especially Newcrest where investors have been upset by production problems at key company mines in NSW and PNG.
Investor sentiment on Wall Street was undermined by a series of weak earnings reports from leading S&P 500 companies (starting with tech giant, IBM late on Tuesday).
That continued this morning with Amex shares down 3% in after hours trading after its weaker than expected quarterly result.
So Wall Street closed lower for a second day in a row.
The Dow lost 48.50 points, or 0.3%, to end lower at 17,168.61, while the S&P 500 finished 11.83 points, or 0.6%, at 2,018.94. And the Nasdaq Composite ended down 40.85 points, or 0.8%, at 4,840.12 as key drug stocks were sold off.
That unnerved investors, but more worrying was the very sharp fall in Shanghai, for no real reason (situation normal for China). The Shanghai Composite swung to a 3.6% loss in afternoon trading, after being up 0.6% in the morning and ended down 3.05%.
The tech-heavy Shenzhen Composite closed more than 5% lower, more than erasing a 0.5% gain from morning trading.
Until yesterday, Chinese stocks had been rising since investors returned from a week long holiday at the start of the month and at the close Tuesday had jumped 12% so far in October and was trading at a two month high. But no more as every sector of the Shanghai market fell in late trading.
Australian shares spent most of Wednesday in the red, but staged a late-charge, led by the banks and mining stocks, to finish in the black.
The ASX200 index was down almost 0.8% at midday, but gradually regained ground to end the session up 0.2% at 5248.3. The All Ordinaries index ended 0.3% higher at 5286.5.
The question for investors is which slide will drive sentiment today – a lot of investors will be watching the start of the day in Shanghai this afternoon with some concern.
