Daily Market Reports | Jul 07 2014
This story features ENERGY RESOURCES OF AUSTRALIA LIMITED.
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By Greg Peel
Last Monday the ASX 200 closed the financial year just under 5400 and on Friday we closed over 5500. The trade has been one of squaring up for tax or other purposes for year-end then diving straight back in, with Wall Street providing the incentive.
Volume has not been convincing, with school holidays ensuring many empty desks, and as yet the wider small investor community is hesitant to get involved. But if we can crack 5554, being the previous intraday high set in late April, we’re into technical blue sky again. Not the same blue sky as Wall Street, for which new highs are all-time, but post-GFC blue sky. It’s still a long way to go to 2007’s 6828.
The major impediment remains the Aussie dollar, and unfortunately if the iron price returns to triple digits and local economic data look healthy, the Aussie will act as a dampener. Nothing will change until the Fed raises rates, at which point the Aussie should finally retreat. As to whether Wall Street will panic or take the first rate rise in its stride is yet to be seen.
Nothing was further from the minds of Wall Street traders over the weekend as they kicked back for the Fourth of July holiday. US markets were closed on Friday, and markets globally were sympathetically quiet.
The Aussie is up 0.2% to US$0.9365 with the US dollar index a tad higher at 80.27. Gold is steady at US$1320.50/oz.
Base metals were all slightly lower on Friday night on small moves other than volatile nickel, which fell 2%. Spot iron ore is unchanged at US$96.50/t.
The oils were also slightly lower, with Brent sitting at US$111.07/bbl and West Texas at US$104.01/bbl.
Futures traders are anticipating more of the same this week, with the SPI Overnight up 13 points or 0.2%.
Critical to the Fed’s rate rise timing are US economic data releases, of which there are few this week. Chain store sales and wholesale trade numbers on Thursday are the highlights. But Wednesday night sees the release of the minutes of the last Fed meeting. What will be interesting to investigate here is the level of any building dissention in the FOMC ranks. We know Yellen is a card-carrying dove but are other members starting to question the wisdom of too-low rates in the face of quietly rising inflation?
In contrast, it’s a busy week for Australian data.
We begin today with the ANZ jobs ads series along with the construction PMI. Tomorrow it’s the NAB business confidence survey and on Wednesday the Westpac consumer confidence survey. Have consumers recovered from initial budget shock? And assumed the budget that comes to pass won’t look as bad as the budget treasurer Joe Hockey and finance minister Arnold Schwarzenegger originally proposed?
On Thursday it’s the June jobs numbers and Friday sees housing finance and investment lending data.
Beijing will release Chinese inflation numbers on Wednesday and the trade balance on Thursday.
Watch out for any positive influence this week afforded by the visit of Japanese prime minister Shinzo Abe to our shores to discuss closer trading ties. In the shadow of Chinese trade, it’s easy to forget Japan buys a lot more of our coal than China, and plenty of iron ore and LNG, among other things.
Energy Resources of Australia ((ERA)) will report its June quarter production numbers on Thursday, heralding the beginning of the resource sector’s quarterly reporting season.
Rudi will appear on Sky Business today at 11.15am, on Wednesday at 5.30pm and on Thursday at noon and again between 7-8pm for the Switzer Report.
For further global economic release dates and local company events please refer to the FNArena Calendar.
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