Global markets were higher overnight as investors digested more quarterly earnings figures and commodity prices jumped. Strong earnings from the likes of McDonald’s and Caterpillar bolstered optimism on Wall Street.
Moves higher in iron ore, copper, and oil saw resource stocks well supported, and we would expect the ASX miners to perform well today.
The price of oil has made gains following positive comments from this week’s OPEC meeting where Saudi Arabia confirmed it would support extending production cuts to curb the global energy supply glut. US Crude oil (West Texas) is currently trading at approx. $48 a barrel, as prices have recovered this month after trending lower for most of 2017. Recent heightened geopolitical tension across key OPEC nations (such as Saudi Arabia, Iran and Iraq) could be a positive for the oil price, however it is also possible that a rift between Qatar and several key Gulf Arab nations could impact OPECs plans to curb oil production, in our view.
Stock in Focus: Woodside Petroleum (WPL.AX)
As we have discussed in the past, there have been a number of positive developments for the oil industry since the turmoil experienced in early 2016, including OPEC’s dramatic change of stance to curb oil output. However, our view has been that prices will cap out at around the $50 level in the near term primarily due to the impact of US shale gas producers increasing production.
Woodside Petroleum has been our top ASX energy play since April 2016.
WPL recently released its 2nd quarter production figures with solid sales revenue of US$867 million and energy production figures. Woodside CEO Peter Coleman said that the company continued to perform to plan progressing activities across its portfolio. WPL also remain committed to their acquisition strategy.
We currently have a BUY recommendation on WPL as our preferred ASX energy play.
Members should look out for a full update on WPL to be released in today’s weekly report.
Australia & New Zealand Market Movers
The Australian share market was higher on Tuesday (ASX 200 index +0.68%) with Healthcare and Consumer Discretionary stocks leading the market while Telco’s weighed. In terms of stocks news-flow there was more bad news for Coca-Cola Amatil as it was reported that Woolworths is looking to cut the company’s bottled water shelf space.
The New Zealand market rallied on Tuesday (NZX 50 index +0.40%) with Fletcher Building and A2 Milk Co gaining while Sky Network Television fell sharply. In stock news, Retirement Village company Summerset has bought land to build a third retirement village in Christchurch, bringing its greenfield sites to seven across the country. Summerset yesterday said it had bought 9.5 hectares in Hawthornden Road in the Christchurch suburb of Avonhead, close to the Russley Golf Course and other recreation areas.
3 Things Markets Will be Watching this Week
1. US Corporate Earnings season will be centre stage with major Tech stocks such as Amazon & Facebook set to report
2. The US Federal Reserve makes an interest rate decision Thursday morning (AU/NZ time)
3. OPEC oil producing nations are set to meet in Vienna this week
Have a Great Day,
Team