Market falls with oil, iron ore and local business confidence
Weak leads from international markets overnight ensured the local index started under pressure, and it very much remains this way at midday.
US and European markets fell as growth trepidations returned to the fore. Weak data out of China and Japan highlights the current polarisation occurring within global markets. On the one hand, the US economy is on the up, along with its currency, and is flirting with interest rate hikes. On the other, the rest of the world is struggling to make traction, with monetary stimulus the only apparent remedy. In recent times, market action has reflected the toing and froing between these opposing themes, but on this occasion, global weakness reigned.
Locally, the continued plunge in commodity prices is hurting our index. The dramatic dive in the price of oil overnight has mugged the Energy sector. Likewise, further falls in the iron ore price has the Materials sector deep in the red. Right now, the naming of BHP’s spinoff company, South32, seems apt.
Adding to the gloom, this morning’s NAB Business Confidence figure have disappointed, coming in at a read of 1, compared to last month’s read of 5. This is the fourth consecutive decline, which doesn’t bode well for the local outlook, or sentiment in general.
The local currency is heading the same direction as the index, losing circa 35 pips after this morning’s NAB Business Confidence release. It last traded at 0.8261 USD.
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Frequently Asked Questions about this Article…
The local market index started under pressure due to weak leads from international markets, particularly from the US and Europe, where growth concerns have resurfaced.
Global markets are affecting local business confidence negatively, as weak data from China and Japan highlight global economic struggles, contributing to a decline in local business sentiment.
The dramatic dive in oil prices has significantly impacted the local market, particularly hurting the Energy sector, which has seen a substantial decline.
The continued fall in iron ore prices is negatively affecting the local market, with the Materials sector experiencing deep losses as a result.
The recent NAB Business Confidence figure, which came in at 1 compared to last month's 5, indicates a fourth consecutive decline, suggesting a negative outlook for local business sentiment.
The local currency has been declining, losing approximately 35 pips following the release of the NAB Business Confidence figure, and was last traded at 0.8261 USD.
The naming of BHP's spinoff company, South32, seems particularly fitting given the current market conditions, as it reflects the challenges faced by the Materials sector amid falling commodity prices.
The main factors contributing to the current global market weakness include weak economic data from China and Japan, contrasting with the US economy's growth and potential interest rate hikes, leading to a polarized global market.
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