Steady open as Woodside investors wait on details of possible Wheatstone acquisition

Yesterday's news on Greek politics and China's bond market came at a time when US and European stock markets have extended rallies and pushed valuations higher. This makes those markets vulnerable to downward corrections as profit takers act to avoid missing out.

By CMC Markets · 10 Dec 2014

By CMC Markets ·
10 Dec 2014

Comments

Yesterday’s news on Greek politics and China’s bond market came at a time when US and European stock markets have extended rallies and pushed valuations higher. This makes those markets vulnerable to downward corrections as profit takers act to avoid missing out. The situation in the local market is a little different, with the ASX 200 index already 5% below its November high.

Last night’s rally in oil, copper and gold is likely to steady the tone in resource stocks at the open this morning and help to provide a relatively steady start for the overall ASX 200 index. While shareholders in resource stocks may by now be wary about assuming that short term rallies in commodity prices signal the end of the longer term downtrend, the size of last night’s rally in gold might make this sector a bright spot for today’s market.

Woodside Petroleum will be a focus for investors given press reports that it is in the running to buy Apache’s share in the Wheatstone LNG project. Not long ago Woodside was being criticized as having no growth prospects. This may now turn out to be an advantage. Long term winners in the resource space tend to be those with the balance sheet capacity to strike at times of cyclical downturn, picking up good quality assets at lower prices. Investors will be hoping Woodside is able to drive a hard bargain.

For further comment from Ric Spooner please call 02 8221 2137.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What impact do Greek politics and China's bond market have on US and European stock markets?

Greek politics and China's bond market news have contributed to extended rallies in US and European stock markets, pushing valuations higher and making them vulnerable to downward corrections as investors look to take profits.

How is the ASX 200 index performing compared to its November high?

The ASX 200 index is currently 5% below its November high, indicating a different situation compared to the extended rallies seen in US and European markets.

What effect did last night's rally in oil, copper, and gold have on the market?

The rally in oil, copper, and gold is likely to provide a steady tone for resource stocks at the market open, potentially leading to a relatively stable start for the overall ASX 200 index.

Why might resource stock investors be cautious about short-term rallies in commodity prices?

Resource stock investors may be cautious because short-term rallies in commodity prices do not necessarily signal the end of a longer-term downtrend, making it important to remain vigilant.

Why is Woodside Petroleum a focus for investors currently?

Woodside Petroleum is in the spotlight due to reports that it may acquire Apache's share in the Wheatstone LNG project, which could be a strategic move given its previously criticized lack of growth prospects.

How could Woodside Petroleum benefit from acquiring Apache's share in the Wheatstone LNG project?

Woodside could benefit by leveraging its balance sheet capacity to acquire quality assets at lower prices during a cyclical downturn, potentially positioning itself as a long-term winner in the resource sector.

What are investors hoping for regarding Woodside's potential acquisition of the Wheatstone LNG project?

Investors are hoping that Woodside will be able to negotiate a favorable deal, acquiring Apache's share in the Wheatstone LNG project at a good price.

Who can be contacted for further commentary on the market situation?

For further commentary, Ric Spooner can be contacted at 02 8221 2137.