Aust market trades in small volumes

Following some encouraging economic news out of the US and a rally in base metal prices overnight, the resources sector was the one to watch out for today. News overnight that Rio Tinto's rights had been well received by the UK was also a positive, and Rio shares rallied on the open.

Rio Tinto's situation has improved out of sight. The share price has benefited from a recent run-up in commodities prices, and there is a general realisation that the worst is behind them. They now have proven funding flexibility, their debt is under control, and it appears shareholders no longer want to physically attack the board! You would have to say the medium term outlook for Rio now is fairly bullish.

Today's trade figures remind us once again that Australia may very well feel some sizeable aftershocks from the global financial crisis. It's clear that following comments from the Westpac chairman this morning that unemployment is set to move higher, and Australia's terms of trade will likely deteriorate further towards year end.

So despite a strong performance from our miners today, and a mixed performance from our banks, it was the energy sector that prevented our market from making any real gains today. A fairly scattered day.