US indices logged their fifth decline in a row amidst light trade as concerns over the situation in Europe lingered. Earlier in the day European bourses had tumbled following violent anti-austerity protests in both Spain and Greece. In US economic news, new homes sales were slightly weaker than expectations while crude oil inventories rose 2.4 million barrels versus an expected fall of 1.7 million barrels.
The technology laden NASDAQ was the biggest decliner, slipping 0.77 per cent. The S&P 500 fell 0.57 per cent while the Dow Jones Industrial Average retreated a more modest 0.33 per cent. Unsurprisingly, the volatility, or "fear” index as it’s become better known as over recent times, jumped sharply to 17.
Following yesterday’s grind higher from early morning lows to only close down 0.3 per cent, the domestic S&P/ASX 200 index looks set for another weaker start with SPI futures pointing towards a 0.52 per cent fall to around 4338 at the open.
Based on the negative session on both sides of the Atlantic, it looks like declines are going to be broad-based at the Australian open. In both Europe and the US, financials were among the worst performers as the sellers moved in, seemingly booking profits made over recent months ahead of the end of the third quarter tomorrow. Given that is has been a strong third quarter, this may be a continuing theme as participants look to sell outperforming stocks to reweight their portfolios.
The materials sector looks set for another weak session with both BHP Billiton and Rio Tinto seeing strong selling pressure in London. Nonetheless, BHP’s ADR is pointing towards more modest declines on the open.
Base metals reversed yesterday’s gain on the London Metals Exchange, losing between 1.7 per cent and 3.4 per cent, with tin the worst performer. Gold names are likely to come under pressure too after the precious metal fell to a two week lower of $US1736.73/oz
However, on a slightly more positive note, iron ore prices managed to firm slightly, up 0.5 per cent at $US104.2/t; this may see the iron ore stocks stabilise somewhat after they were some of weaker performers yesterday.
With nothing in the way of local economic releases, it’s going to be another session with few domestic drivers unless something stock-specific comes out of the woodwork. This potentially means that traders are left to focus on the macro concerns from offshore, which isn’t an ideal situation.
MARKETS SPECTATOR: Tied to harsh Atlantic tides
With little in the way of domestic drivers, the Australian market is set for a tough day as it takes its pointers from dour overseas bourses.
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