Shaky Start

Investors’ nerves are twanging. A combination of low enthusiasm and an inordinate focus on potential risks has Asia Pacific markets under pressure again today. The repercussions of a weak read on China manufacturing that saw mainland shares plummet continue to echo after European and US markets sagged. While futures markets are indicating opening falls, the late rally in the Dow and a resurgent iron ore price could mean a better than expected performance on the ASX.

Dick Smith Holdings announced this morning it is in voluntary administration. The subsequent suspension from trading marks a very sorry end for investors, who must now wait to see if the value of the company assets still outweigh the debts. The pain of a wipe out will likely increase general suspicion about the value in buying into private equity IPOs.

Analysis shows the predictive ability of the first day of trading for the year is low, but the performance over January is a more reliable indicator. Today’s Australian consumer confidence numbers are unlikely to shift the outlook, but services PMI data due tomorrow has the potential to shape the action in the days and weeks ahead.