ASX down 0.5%, resources and retail in focus

The key themes of the past year were in stark relief today

a woman

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The S&P / ASX 200 closed at 4254 points today, down 0.5 per cent as our market digested news from our biggest miner and the struggling discretionary retail sector.

More of the same… with a twist

If there have been two themes dominating our markets over the past year or so, they've been the strength of the resources sector and the challenges confronting our retailers – especially those in the discretionary space.

Today's market action was something of a microcosm of those themes, but with a key difference – while discretionary retailers took a bath, resources companies has a similarly poor day.

Belling the cat on the boom?

Both themes are worth reviewing – we made reference to BHP Billiton Limited's (ASX: BHP) review of Chinese demand in a recent article, and it's a timely reminder that all booms come to an end eventually. Sometimes they end with a bang, other times they simply gently deflate – the latter is evident in the cooling in house price growth over the past couple of years.

When you're investing, it's incredibly important to consider the potential risks and related downsides. Even if you're in the 'stronger for longer' camp, it would be foolhardy not to consider the alternate scenario.

Challenging times for retailers

On the other hand discretionary retail is sticking stubbornly to the script of the past few years. The results from David Jones Limited (ASX: DJS) and Kathmandu Holdings Limited (ASX: KMD) and the cautious outlook from OrotonGroup Limited (ASX: ORL) (even if they managed some impressive first-half growth), all released today, underscore the degree to which we're keeping our wallets closed.

The rest of the market seemed to fall in sympathy, with only the Health Care and Utilities sectors of the ASX 200 showing growth today.

Foolish take-away

You can never take too much from a single day of trade – but rarely are the key business and investing themes so clearly front and centre.

If you are looking for ASX investing ideas, look no further than "The Motley Fool's Top Stock for 2012." In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

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Scott Phillips is a Motley Fool investment analyst. Scott owns shares in David Jones and OrotonGroup. You can follow him on Twitter @TMFGilla. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691)

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