Steady macro environment as reporting season hits full swing
A steady open looks likely for the ASX 200 index this morning as investors assess a large number of company reports.
The rally in US stocks last night will not be much help today. It was essentially a catch up on global markets, which had rallied over the US long weekend.
The oil market’s reaction to the announcement of a production freeze by the Saudis and Russia was understandably negative. However, to the extent that this is “the beginning of a process” as described by the Saudi Oil Minister, markets will have a watching brief on further developments. Against that background, rumours of further meetings and initiatives could again be a source of volatility in coming months.
In the meantime an oil production freeze at current levels will have no impact on the near term supply balance. This explains the oil’s decline following yesterday’s short covering rally when the Saudi/Russian meeting was announced. There will also be substantial practical difficulties in implementing or extending this agreement especially since Russia has indicated that it is conditional on other nations agreeing to participate.
News of strong growth in Chinese aggregate financing was taken as a positive for near term growth prospects yesterday. However, this may be tempered by the possibility that the jump in domestic credit could be related to a shift out of FX loans due to concerns about currency fluctuations as well as to a traditional surge in New Year activity.
Frequently Asked Questions about this Article…
The ASX 200 index is expected to have a steady open as investors evaluate a large number of company reports. Despite a rally in US stocks, it is not expected to significantly impact the ASX 200 today.
The announcement of a production freeze by Saudi Arabia and Russia has been met with a negative reaction in the oil markets. This is largely because the freeze at current levels will not affect the near-term supply balance.
There are substantial practical difficulties in implementing the oil production freeze, especially since Russia has made it conditional on other nations agreeing to participate.
Rumors of further meetings and initiatives related to the oil production freeze could be a source of market volatility in the coming months.
There has been strong growth in Chinese aggregate financing, which is seen as a positive sign for near-term growth prospects. However, this may be influenced by a shift out of FX loans and a traditional surge in New Year activity.
The recent growth in Chinese credit might be tempered by concerns about currency fluctuations and the possibility that the increase is related to a traditional surge in New Year activity.
The US long weekend led to a catch-up rally in US stocks, as global markets had already rallied during this period.
Oil prices declined following the Saudi/Russian meeting announcement due to a short covering rally and the realization that the production freeze would not impact the near-term supply balance.
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