The S&P/ASX 200 Index closed down 19 points or 0.44% lower to 4285 points today, after reacting to the falls on EU and US risk markets last night. In after hours trading, the index is up a few points, with Euro and US markets pointing to mixed opens.
Asian markets had a worse day, with Japan’s Nikkei 225 down 0.8% to 8532 points, the Hang Seng losing just over 1% to 19283 and the Shanghai Composite currently down 0.17% to 2524 points.
In other risk assets, the AUD was sold off against the USD on the back of the release of the RBA October meeting minutes, falling to 1.0179, whilst WTI crude was steady at $97.96 USD a barrel.
Gold slipped 0.3% during the Asian session and is currently at $1772 USD an ounce or $1737 AUD an ounce.
Movers and Shakers
A mixed day on the board of the ASX, with the property sector the biggest loser, down 1.2% whilst the IT sector put on just over one percent.
The banks were mixed, with ANZ up 0.2%, Commonwealth (CBA) losing 1.4% on the back of “modest” profit numbers and suggesting slower system credit growth, National Australia Bank (NAB) was down 0.16% whilst Westpac (WBC) was up a similar amount. Basically a sideways day all round for finance.
Macquarie (MQG) put on 0.6%, whilst healthcare stalwart Cochlear (COH) was bid up over 1% to $55.37 a share. Its “twin” CSL also continued to make gains, up 1.1% whilst Telstra (TLS) put on 0.63%.
BHP Billiton (BHP) fell 1.6% in reaction (?) to PM Gillard’s reversal of policy to allow exporting of uranium to India.
As a result, Paladin (PDN) was bid up over 3% whilst Energy Resources Australia (ERA) lost a similar amount, mainly because of dilution effects from a capital raising, so it was a single day mixed result.
Rio Tinto (RIO) lost 1.15% whilst gold miner Newcrest Mining (NCM) slipped as the gold price stalls (in both AUD and USD). Fortescue (FMG) was very quiet again – only up 0.4% alongside a steady Woodside Petroleum (WPL) rounding up the “ASX8”. Defensive stock Woolworths (WOW) also finished steady.
The Charts
Yesterday’s bearish signal won through today, as the ASX200 continues to muddle through a ranging channel with significant resistance at 4350 points, although the short term trend (marked in green on the chart below) is still pointing up.
The lower edge of this channel is temporary support, with a breach below (approx 4200 points) in the next few days being bearish, with a close initial target at 4100 points.
On the weekly chart, the market is reverting back to the medium term downtrend (marked in red) also suggesting a target of 4100 points if this rally does not pick up speed to breach the 4400-4450 congestion area (old resistance and long term moving average levels).
I must continue to caution that this is a typical bear market rally that has a low probability of morphing into a cyclical bull market. The market could continue to track sideways for sometime yet before a clear breakout – either way – eventuates.
Tread carefully and assign your asset allocation based on the risks.
Watch my “Chart of the Day” posts for continued analysis of US, Euro and Asian markets which will lead the way.