IG Markets - Afternoon thoughts

Across Asia, regional markets were mostly higher in afternoon trade as traders covered their short positions after heavy selling across the region yesterday. The Korean Kospi is the best performer, stronger by 0.9% while the Hang Seng and Nikkei 225 are both 0.2% firmer. The Shanghai Composite is modestly weaker, down 0.1%.

In Australia, the ASX 200 is currently 0.2% firmer at 4808, having clawed its way back from a session low of 4772. Having underperformed offshore leads in the previous session, the local market has once again seen buying support emerge below 4800 with investors finding it irresistible to pass up opportunities stemming from the current oil-induced weakness.

Leading the benchmark index back into positive territory has been the financial, energy and industrial sectors, while on the downside, the material, consumer discretionary and healthcare sectors are the biggest drags on the market.

It looks like yesterday’s selling was a bit overdone, both locally and in Asia. Traders have realised this today and stepped into the market to snap up some bargains. Media reports this morning suggesting a possible resolution for a no-fly zone, as well as rumours of Gaddafi seeking an orchestrated standing down saw oil and gold prices retreat from their overnight highs. This seems to have eased some of the fears in the market.

Whilst the problems in Libya are rattling global confidence and sentiment, they have very little actual impact on the majority of our big blue chip names. Investors are choosing to look past the short term volatility and pick up these quality names at reduced prices.

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