Bourse set for solid start to week as oil prices take off

THE sharemarket is expected to open higher this morning, with the futures market suggesting a gain of 30 points, after the head of the International Monetary Fund said European and US financial markets showed signs of stabilisation.

By InvestSMART · 19 Mar 2012

By InvestSMART ·
19 Mar 2012

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Oil stocks are also expected to get a boost from a surge in the price of oil - West Texas Intermediate crude oil rose 2 per cent to $US107.25, while Brent crude oil jumped 2.9 per cent to $US126.10 - as a positive US lead on Friday is expected to filter through to the local bourse.

Speaking in Beijing yesterday at the China Development Forum 2012, Christine Lagarde, the managing director of the IMF, said the world economy had "stepped back from the brink" and had cause to be more optimistic.

"Just a few months ago, the situation was decidedly gloomy," Ms Lagarde said.

"Indicators for the last quarter of 2011, namely for Europe and the United States, did not provide much reassurance.

"Yet, today, we are seeing signs of stabilisation signs that policy actions are paying off."

The CommSec chief economist, Craig James, said the futures market was pointing to a gain of 30 points at the start of trade, probably led by energy stocks after the rise in the price of oil.

"For our market, the oil price was up significantly so that's going to be good news for the energy stocks," Mr James said.

Other sectors would probably make gains in a delayed reaction to a positive US lead on Friday that failed to produce gains in the local market that day, he said.

Miners BHP Billiton, Rio Tinto, and Fortescue Metals escaped unscathed after tropical cyclone Lua battered the Pilbara region on Saturday. The port of Dampier, used by Rio Tinto, remained open.

Port Hedland, the world's biggest iron ore port used by BHP and Fortescue, reopened yesterday.

This week will be dominated by US housing figures and the release of minutes of the Reserve Bank's monetary policy meeting earlier this month.

On the corporate front, first-half earnings results for this year will be posted by David Jones, Sigma Pharmaceuticals, Brickworks, Washington H Soul Pattinson and Premier Investments.

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Frequently Asked Questions about this Article…

Why is the ASX expected to open higher today?

The futures market was pointing to a gain of about 30 points, helped by a positive US lead and comments from the IMF suggesting global financial markets are stabilising. A sharp rise in oil prices is also expected to lift energy stocks, which should support the local bourse.

How are rising oil prices likely to affect Australian energy stocks?

Higher oil prices typically boost energy producers and related stocks. The article notes West Texas Intermediate rose about 2% to US$107.25 and Brent jumped about 2.9% to US$126.10, with CommSec saying energy names are likely to lead gains on that basis.

Which oil benchmarks and price moves were reported in the article?

The article cited West Texas Intermediate crude at US$107.25 (up ~2%) and Brent crude at US$126.10 (up ~2.9%).

What did IMF managing director Christine Lagarde say and why does it matter for investors?

Christine Lagarde said the world economy has 'stepped back from the brink' and is showing signs of stabilisation, suggesting policy actions are working. For investors, that kind of commentary can improve market sentiment and reduce downside risk in the near term.

Did cyclone Lua disrupt major Australian miners or export operations?

According to the article, miners BHP Billiton, Rio Tinto and Fortescue Metals escaped unscathed after cyclone Lua battered the Pilbara region. The port of Dampier remained open and Port Hedland had reopened, limiting disruption to iron ore exports.

Which ports were mentioned and why are they important to mining investors?

The article mentioned the port of Dampier (used by Rio Tinto) and Port Hedland (used by BHP and Fortescue). These are major iron ore export ports in the Pilbara, so their operational status matters for production and revenue flow for mining companies.

What economic events should investors watch this week?

The week will be dominated by US housing figures and the release of the minutes from the Reserve Bank's most recent monetary policy meeting—both of which can move markets and influence investor sentiment.

Which companies were scheduled to post first‑half earnings this week?

The article listed first‑half results due from David Jones, Sigma Pharmaceuticals, Brickworks, Washington H Soul Pattinson and Premier Investments.