Australian investors shrugged off record highs from Wall Street as the local bourse dipped into red shortly after open. Volumes remain skinny for Thursday trade, which might suggests any selling activity is not met with strong conviction.
Despite iron ore making ground overnight, the major iron ore producers faced a savage sell off at lunch time. BHP and its mini me spin-off South32 both fell over 2% during the session. Material based stocks lost 1% as a sector, with the exception of Fortescue Metals which oscillated in green throughout the session. After the stock’s meteoric 10% ascent on Tuesday, traders are still holding onto whispers of a potential Chinese take over, despite Andrew Forrest’s denial.
The big banks also endured early selling pressure for the second session this week. Investors took the opportunity to take profit following the bank buying bonanza we observed earlier this week. In afternoon trading, both Westpac and ANZ both reverted back to green territory, helping to lead the local bourse back towards a flat finish.
Australian business spending for the March quarter came in unexpectedly weak, failing by 4.4%. This sent the AUD into immediate free fall, dropping over half a cent to cross below the 0.77 handle, the first time in over five weeks. The dollar’s re-entry back into 0.76 ranges might be tested with unemployment claims due out in the US overnight.For further comment from CMC Markets please call 02 8221 2135.