Month: January 2015
What does history tell us results from low oil prices?
• It was a choppy session with the ASX 200 today, closing 28 points higher at 5381 with a range of 57 points; however it was still not able to recoup the losses from the past 2 days.• The close into positive territory was supported by the “big 4” banks with National Australia Bank (NAB) up 30c, or +0.9% at $33.72 and ANZ up 19c, or +0.6% at $31.91.• The Insurance sector had a good day, with QBE up 2.1% at $11.15 and IAG up 1.5% at $6.30.• The Iron Ore sector closed mixed, as it seems investors were switching out of Fortescue Metals (FMG) down 7c, or -2.6% at $2.67 while RIO Tinto (RIO) closed up 136c, or +2.4% at $58.65.• The energy sector continued its drag, with Santos (STO) down 2.0% at $7.30 and Oil Search (OSH) down 1.5% at $7.09.
My attention today has moved away from the continual fall in crude oil prices, to US interest rates. They are falling ahead of anticipated increases in official interest rates this year? Global growth is spluttering at best after years of interest rates close to zero with US 10 year bonds falling under 2% for the first time since mid-2013 (see chart 1), clearly Illustrating investors are losing confidence in world economies fast. We have had continual economic stimulus from World Central Banks since the GFC 5 years ago and markets now don’t believe it will result in any impact fast – yesterday, additional China stimulus was announced and the markets fell.
• The ASX 200 began the day weak, trading as low as 5318, or -46 points in the morning; however it managed to close only 11 points lower at 5353 as some investors see these levels inexpensive. We remain bearish at present.• The energy sector continued its weakness, with Santos (STO) down 1.3% at $7.45 and Woodside Petroleum (WPL), down 0.9% at $36.14.• The Banking Sector ended the day mixed, with Commonwealth Bank (CBA) down 0.2% at $85.11, versus National Australia Bank (NAB) up 0.2% at $33.42.
This morning I happily woke to see the Dow down over 300 points (1.9%). All fingers were pointing at oil again, which fell over 5% to sub $US50/barrel for the first time since mid-2009 – see chart 1. However there is more than just oil battering the local resource stocks; conversely falling commodities is helping weaken the $A which in turn appears to be helping the ASX200.
• The ASX 200 fell 86 points, or down 1.6% at 5,364, following the US lead last night, with the Energy sector being the worst performer. Could the anticipated 10% correction have begun?• As anticipated, BHP Billiton closed $1.37, or 4.7% lower at $28.11, Woodside Petroleum ended the day down $1.87, or -4.9% at $36.46 and Santos (STO) down 71c, or -8.6% at $7.55. We remain not to be investors in this sector purely due to the companies being price takers rather than makers.• The banking sector also descended, with ANZ down 39c at $31.78 and National Australia Bank (NAB) down 27c at $33.34.• There were very few diamonds in the rough today, with Newcrest Mining (NCM) up 2.5% at $11.73 and Qantas (QAN) benefiting from the ever decreasing oil price, up 4.4% at $2.61.
American Equities usually corrects ahead of Interest Rate Rises
• It was a choppy session for the ASX 200 today, closing only 14 points higher at 5450, with a range of 40 points.• The banking sector closed mixed, with Westpac (WBC) down 0.3% at $33.16 versus Commonwealth Bank (CBA), up 0.2% at $85.95.• The Gold sector outperformed the market, with Newcrest (NCM) ending the day up 49c, or +4.5% at $11.45 and Regis Resources (RRL) up 5.5c, or +2.8% at $1.995, as it seems some short covering was apparent today.• The New Zealand 50 index had a great start to the year, ending its trading day at record highs, up 34 points at 5603.
Really bullish, there's more to go in the reflation rally
Please enter your login details
Forgot password? Request a One Time Password or reset your password
One Time Password
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
To reset your password, enter your email address
A link to create a new password will be sent to the email address you have registered to your account.
Enter and confirm your new password
Congratulations your password has been reset
Sorry, but your key is expired.
Sorry, but your key is invalid.
Something go wrong.
Only available to Market Matters members
Hi, this is only available to members. Join today and access the latest views on the latest developments from a professional money manager.
Smart Phone App
Our Smart Phone App will give you access to much of our content and notifications. Download for free today.
