SYDNEY: The Australian sharemarket opened lower following falls on Wall Street which failed overnight to build on its post-Labor Day rally.
At the 10.15am (AEST) official market open, the benchmark S&P/ASX200 index had declined 99.5 points, or 1.91 per cent, to 5121.6, while the broader All Ordinaries dropped 95.7 points, or 1.83 per cent, to 5141.2.
The open followed mixed leads from overseas, with more than 1 per cent declines on Wall Street and plus-1 per cent gains in France and the UK. Yesterday, China’s key bourse finished more than 2 per cent higher while Japan was up 7.7 per cent.
IG market analyst Chris Weston said the falls in Wall Street on little news indicated that the recent rally had contained a large component of short covering from funds.
“The talk from one US investment bank was that asset managers and insurance companies held sizeable short positions on S&P futures in the lead up to this week and one can deduce the massive volume we have seen early this week was largely covering,” he said.
Nevertheless, Mr Weston said the mood had lifted in recent days although sentiment on the ASX would be sensitive to China again today.
“Let’s see how China trades, as the 30-day rolling correlations between the CSI 300, Shanghai Composite and S&P futures — and therefore Asian markets — has increased sharply of late,” he said.
In economic news, China releases inflation data at 11.30am (AEST) while at home the Australian Bureau of Statistics produces monthly employment figures.
Materials stocks were the worst hit of the major sectors, down 2.12 per cent overall, as BHP Billiton lost 1.99 per cent to $24.16 and Rio Tinto fell 1.49 per cent to $50.74. But Atlas Iron improved 6.45 per cent after it announced it had hit production targets early.
