Next Investors logo grey

Global markets trended lower as oil price tumbles

Published 15-MAR-2017 10:03 A.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

As the oil price plummeted from the previous day’s close of US$48.40 per barrel to an intraday low of US$47.09 per barrel, both US and European markets came under pressure.

The 0.2% fall in the Dow to 20,837 points was also attributed to investors taking a cautious approach ahead of Fed Chair Janet Yellen’s address tomorrow.

While consensus for a rate hike stands at more than 90%, the market will be examining the rhetoric surrounding her address, attempting to ascertain how many more increases are likely in 2017 and what will be the likely timing of those increases.

Fence sitting also impacted the NASDAQ as it came off 0.3% to close at 5856 points, broadly in line with the S&P 500’s decline.

The FTSE 100 came off 0.1% to close at 7382 points, dragged lower by energy and bank stocks. It was the energy sector that did most of the damage with the likes of BP and Royal Dutch Shell coming off substantially.

It was a similar story elsewhere in Europe with the Paris CAC 40 falling 0.5% to close at 4974 points. The DAX was a little more resilient, only coming off slightly to close at 11,988 points.

It will be interesting to see how Australian energy stocks fair given that there was a late rebound in the oil price after US markets closed. Approximately two hours before the open the oil price was hovering in the vicinity of US$48.50 per barrel, well ahead of the US mid-session low.

That said, it is the underlying dynamics driving the oil price lower that is of concern. OPEC producers could take the decision to reintroduce new supply given there is evidence that production from the likes of Iraq and Russia is offsetting the expected positive impact of reduced output by OPEC members.

Rhetoric from Saudi Arabia could be telling in that they informed global sources of recent increased production that could be pumped into the market should it change its stance on limiting supply.

Elsewhere in the commodities space, gold was only down slightly as it continued to hover in the vicinity of US$1200 per ounce.

There was little movement in base metals with nickel up slightly while copper, zinc and lead were relatively flat.

Iron ore was also unmoved at circa US$88 per tonne

The Australian dollar continued to hover in the vicinity of US$0.755.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.