Weaker oil price and ex dividend moves has not been enough to stop Santa optimism.
After moving higher for 7 consecutive days the Santa rally in the ASX 200 index looked under threat, following this morning’s weaker opening.
Iran’s statement that it plans to increase exports by 500,000 barrels a day within weeks of sanctions being lifted is not good news for oil. It’s a reminder that the total amount Iran adds to the market this year is ultimately likely to be well above 500,000 barrels. Iran has also made it clear that it plans to cut prices to restore export market share promptly. If events unfold this way there is not likely to be much relief for oil prices until US producers cut production.
Iran’s aggressive stance on oil exports has led to selling in the energy and materials sectors and a weaker opening for the ASX 200 this morning. The fact that the index lost nearly 11 points due to real estate stocks going ex-dividend today has also been a drag on the market this morning.
Despite these negatives, the pre-Christmas confidence in other market sectors appears to have carried into this morning’s session, despite a weaker lead from US markets. With banks relatively well supported and investors expecting other domestic stocks to benefit from an improving job market next year, we may yet see the Santa rally extend through to the end of the year.
Frequently Asked Questions about this Article…
The Santa rally refers to the phenomenon where the ASX 200 index experiences a rise in stock prices during the holiday season. This year, the rally has been ongoing for seven consecutive days, although recent market conditions have put it under threat.
Iran's plan to increase oil exports by 500,000 barrels a day is putting downward pressure on oil prices. This aggressive move is causing selling in the energy and materials sectors, contributing to a weaker opening for the ASX 200 index.
Oil prices are expected to remain low due to Iran's plan to increase exports and cut prices to regain market share. Relief for oil prices is unlikely until US producers decide to cut production.
Real estate stocks going ex-dividend resulted in the ASX 200 index losing nearly 11 points, contributing to a weaker market opening.
Despite negative factors like weaker oil prices and real estate stocks going ex-dividend, there is optimism due to pre-Christmas confidence in other market sectors. Banks are well supported, and investors expect domestic stocks to benefit from an improving job market next year.
The ASX 200 experienced a weaker opening partly due to a weaker lead from US markets. However, local factors such as confidence in domestic sectors are helping to maintain some market optimism.
The energy and materials sectors are under pressure due to Iran's aggressive stance on increasing oil exports, which is contributing to a weaker market opening.
Yes, the Santa rally could continue if the pre-Christmas confidence in other market sectors persists and if banks and domestic stocks remain well supported, potentially extending the rally through to the end of the year.
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