Looking back on the week just gone, there were a number of standout stories which will continue to influence individual stocks and sectors well into next week. The big ones that immediately come to mind were Qantas, Fortescue/iron ore and the continued run up in gold.
The announcement earlier in the week that Fortescue was scaling back its development plans and reducing costs to boost its balance sheet in light of the recent plunge in iron ore prices will continue to drive sentiment across the sector in the short term. Whilst we’ve seen a strong bounce in the iron ore names today on the back of the positive developments out of Europe, it’s likely to be a relatively short lived dead cat bounce unless the iron ore price begins the miraculous recovery everyone is praying for sooner rather than later. Either way, we’ll almost certainly be hearing more about this story next week.
Another major theme for the week has been the run up gold prices, although it has pulled back during the Asian session to be relatively flat on the week. Nonetheless, in terms of actual gold stocks, many have continued their march higher, with the S&P/ASX Gold Index up more than five per cent. Whilst it looks like gold maybe taking a little bit of a breather at the time of writing, next week’s FOMC meeting will spur plenty of further stimulus talk and in turn keep gold prices front and centre. The general consensus is that further quantitative easing is coming; it’s just a matter of when. This will continue to support gold prices as the US dollar sees renewed pressure.
Whilst it’s only a two-stock issue, Qantas’s announcement of its joint venture with Emirates is certain to keep traders interested in it and rival Virgin Australia. As more details emerge and the broking community, which seems fairly positive towards the announcement so far, pour over the finer points, participants will be wondering whether or not this is the cure-all remedy Qantas has been searching for. Only time will tell but there looks to have been plenty of pundits willing to buy in in recent weeks.