Commodities bounce to extend gains
Strong rallies in commodity indices, led by energy markets, should see local investors shrug off tepid US stock market leads to power shares higher today. Positive momentum in AUD could bring international support, particularly relevant in light of a Bank of Japan monetary target statement today.
Oil markets are firming up as incremental supply side responses pile up. US shale rigs counts are down, and over the weekend Russia issued conciliatory and co-operative statements. Add in a hurricane in the gulf of Mexico as a reminder of the potential for supply disruption, and the 5% overnight rally is easily explained. Bidder Woodside and target Oilsearch could be among the major beneficiaries of this shift in energy market sentiment.
The bank of Japan’s statement on monetary policy is not expected to shift the target for monetary support today, but may lay the ground work for an increase in money supply at its next monetary policy meeting on October 30. Any hints in this direction point to a weaker yen, which may spur buying of international shares as mobile Japanese investors look for returns in more attractive currencies.
Frequently Asked Questions about this Article…
Commodity indices have been experiencing strong rallies, particularly led by energy markets. This positive momentum is expected to boost local shares despite tepid leads from the US stock market.
The oil market is firming up due to several factors: a decrease in US shale rig counts, cooperative statements from Russia, and potential supply disruptions from a hurricane in the Gulf of Mexico. These have contributed to a 5% overnight rally in oil prices.
Companies like Woodside and Oilsearch could be major beneficiaries of the positive shift in energy market sentiment, as they are directly involved in the oil sector.
While the Bank of Japan is not expected to change its monetary support target immediately, any hints towards increasing the money supply could weaken the yen. This might encourage Japanese investors to seek returns in international shares with more attractive currencies.
A positive momentum in the Australian dollar could attract international support, making it a favorable time for investors to consider Australian shares.
The Bank of Japan's next monetary policy meeting on October 30 could be significant if it decides to increase the money supply, potentially impacting currency values and international investment flows.
Energy markets are in focus due to recent supply-side responses, geopolitical factors, and natural events like hurricanes, all contributing to a rally in commodity prices and influencing investment decisions.
Geopolitical factors, such as Russia's cooperative statements, play a crucial role in the oil market by influencing supply expectations and investor sentiment, contributing to recent price rallies.
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