Week Ahead | Oil Surges on Saudi Drone Strike

16 September 2019

Global markets were mixed on Friday, as a drop in Apple stock countered cooling US-China trade tensions. 
​The event to watch this week is the US Federal Reserve interest rate decision on Thursday morning AU/NZ time. The Fed is widely expected to cut its key rate target range by 0.25%. There will be fresh forecasts, including the first look into 2020.
 

Stock in Focus: Crude Oil

​​​​​​​​​​​​​​​​​​​​​​​​​​​​The b​ig news over the weekend was a drone strike that knocked out ~50% of Saudi Arabia's Aramco production. The strike was claimed by rebels in Yeman, but blamed on Iran by the US. A significant volume of the halted oil production should be restored within days, but weeks will be needed to restore full output capacity.

There are now heightened geopolitical risks although the NZ market has opened higher this morning, with clear losers from higher oil such as Air NZ getting hit. The price of oil has jumped about 10% this morning. The big question in our view is whether a one-off incident or the start of something bigger.

​Z Energy has warned consumer petrol prices could rise by 5-10 cents per litre this week. The company noted there was no ‘immediate supply issue’ given plenty of storage in Saudi Arabia although disruption could have a significant effect on oil prices. ​
 

 

Australia & New Zealand Market Movers

​​​The Australian market ​added to its rally on Friday (ASX 200 Index +0.21%) in a week where the European Central Bank pushed the stimulus button and trade war tensions eased ahead of high-level talks between the US and China in October.

The New Zealand market ​fell for a 5th day on Friday (NZX 50 Index -0.​4​%) with Z Energy coming in for another heavy day of selling after downgrading its earnings outlook yesterday. Blue-chip stocks were generally weaker​, while Synlait Milk rebounded from some of its losses from the previous session.​

 

3 Things Markets Will be Watching this Week

  1. ​​Trade War related news-flow is likely to continue to feature in headlines.
  2. ​The US Federal Reserve makes an interest rate decision on Thursday morning AU/NZ time.
  3. Oil related news-flow is likely to feature in headlines following the drone strike on Saudi Aramco
     

 

Have a Great Day,
 

Team

​​​​​​​​​​​​​​​​​​​​​​​​​​​​The b​ig news over the weekend was a drone strike that knocked out ~50% of Saudi Arabia's Aramco production.

Do You Want Daily Market Insights?

If you’re interested in staying up-to-date with the latest news and analysis on stocks, be sure to sign up to BlackBull Research.

1 Month Free Trial

Access our expert stock market research Free of charge with no obligation

Free 1 Month Free Trial

Unlock this article & access our expert stock market research

ASX, NZX & USD Stock Buy, Hold, Sell recommendations. Model Portfolios. Daily news and more

[pmpro_checkout]