After a steady open, the Australian market is now weakening with bargain hunters in short supply.

The limited response of European markets and US futures to the Korean bomb test has prevented really aggressive selling in stocks at this stage. Stock market wobbles in response to Korean incidents have so far been brief. Investors are reluctant to make major portfolio adjustments in the absence of an indication that this situation is likely to lead to significant changes to world trade and financial markets.

However, despite the relatively benign reaction of European markets to the Korean risk, safe haven markets like gold and the Yen remain well supported. Buyers may remain cautious until they have an opportunity to see how US markets react to the situation when they resume after Monday’s public holiday.

After pausing for a few days around $75, selling momentum has resumed in CBA. The effect of CBA’s alleged compliance failures has now been to eradicate its valuation premium to the other major banks.  Selling pressure in CBA is a drag on the ASX 200 this morning. With the stock breaking recent support, potential buyers may be cautious until the flow of bad news starts to dry up and the stock price shows some signs of consolidating