Global markets were mixed overnight as Wall Street erased losses early Thursday morning thanks to a boost in technology stocks, which offset weakness in financials. Investors remain concerned that the Republican tax bill faces an uphill battle in Congress, and are doubtful the details of the released plan will materialise in the final version.
As we touched on yesterday, recent buying across the resources and energy space has contributed to the ASX 200 market index move above the 6000 level for the first time in almost a decade.
Energy stocks have jumped in recent times following a move higher in the price of oil. Brent crude traded near its highest close in more than two years as political upheaval in top crude exporter Saudi Arabia reverberated through the market. Investors have piled into oil as a shake-up of the ruling elite in OPEC's biggest producer was seen to consolidate power with Crown Prince Mohammed bin Salman, who backs extending the group's output cuts aimed at clearing a global glut. The purge also raised concern over instability in the kingdom, supporting a geopolitical-risk premium on crude given heightened tensions with surrounding nations such as Iraq and Iran.
Stock in Focus: Woodside Petroleum (WPL:AX)
WPL shares have rallied in recent weeks on the back of a jump in the price of oil. WPL has been our preferred ASX energy play since we initiated our buy recommendation in April 2016.
WPL has also recently released a solid 3rd quarter report, with sales revenue up 5% on the 2nd quarter to 914m, with strong operational performance from its Pluto LNG project.
We are currently BUY rated on WPL and it remains our top pick in the ASX energy sector.
Members should look out for a full update on WPL to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was a touch higher yesterday (ASX 200 index +0.03%) as the market managed to cling to sharp gains made in the previous session where the benchmark managed to cross the key 6000 level, as investors bought into banks following a well-received earnings update from CBA. The banking sector led gains as steam ran out of the commodities-fuelled rally, and miners such as BHP and Fortescue struggled to extend their substantial recent gains.
The New Zealand market was a touch lower on Wednesday (NZX 50 index -0.11%) with Synlait and A2 Milk dropping while electricity companies Mercury New Zealand and Trustpower rose. A2 Milk Co dragged the index lower, having each sunk as much as -10% earlier in the day. Trustpower said it had boosted first-half profit 80% as its spread of generation assets allowed it to benefit from higher prices.
3 Things Markets Will be Watching this Week
1. We move into the tail-end of US corporate profit announcements, with the level of the market making the current earnings season as important as ever.
2. The Reserve Bank of New Zealand makes an interest rate decision Thursday.
3. The Reserve Bank of Australia makes an interest rate decision on Tuesday.
Have a Great Day,
Team