Energy drivers ASX gains
What Mattered Today
Energy stocks the main focus today after OPEC surprisingly cut production which sent the price of Crude up more than 9% overnight. We say surprisingly given the market was thinking something tentative / loose would be agreed and more likely in terms of a production freeze rather than a cut – hence the strong move up in the Oil price and subsequent buying of Energy coys on the ASX today.
Source; Bloomberg
The other aspect of the move is around inflation (or reflation); higher energy prices = higher inflation and higher inflation = higher interest rates. Longer dated bonds were sold off overnight pushing up yields – the concept of a steepening yield curve is supportive of bank earnings – (financials up +1.29% here after the sector rallied +1.3% in the US overnight). On the flip side, the companies that carry larger debt levels, like the infrastructure plays were sold off. For instance, Origin (ORG) up +8.75% to close at $6.46 however Transurban (TCL) was down -3.89% closing at $10.13.
Origin Energy (ORG) Daily Chart
Some of the overseas earners had good moves today, QBE (QBE) was strong following the uptick in US interest rates + a higher $US adding +4.21% to $11.64 while Ansell (ANN) also had a day in the sun putting on +4.78%
QBE Insurance (QBE) Daily Chart
Vocus (VOC) finished down 1c but the volume / selling pressure is now drying up in that stock; 47m shares traded on Tuesday – the day of their AGM, 33m Wednesday and under 10m today…The selling pressure is subsiding and we now have a good chance that a low is in place.
On the economic front Chinese Manufacturing data headlined with the official manufacturing PMI printing 51.7 versus 51 expected while the Caixin came in line at 50.9 - a good result however it still feels like the material stocks are ‘toppy’…We stand by our call that We like Oil but not Iron Ore at current levels
On the market today, we had a range of +/- 46 points, a high of 5500, a low of 5454 and a close of 5500, up +59pts or +1.1%
ASX 200 Intra-Day Chart
ASX 200 daily chart
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