Commodities in the spotlight after gains in iron ore & base metals
Published 11-JAN-2017 11:48 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
The most solid lead from overseas market was a 0.5% gain in the FTSE 100. Elsewhere, markets were mixed with the Dow fluctuating in and out of positive territory.
A further plunge in the oil price weighed on US markets and there was also volatility within the financial sector.
However, the NASDAQ continued its strong run, hitting an all-time high of 5564 points before closing in the vicinity of 5550 points.
Australian markets are likely to be most affected by movements in commodity prices with the fall in crude continuing to place pressure on energy stocks after the likes of Woodside Petroleum, Santos and Oil Search experienced significant share price declines yesterday.
The other key theme to be played out relates to mining stocks after a surge in the iron ore price overnight, continued gains in gold and silver, as well as good gains in copper, nickel, zinc and lead.
A circa 3% gain in copper which saw it push up towards US$2.60 per pound, combined with positive sentiment towards gold should see copper gold stocks perform well.
Sector heavyweights, Newcrest Mining and South32 could be well supported with the likes of Sandfire Resources and Oz Minerals also likely to come under the spotlight. Diversified gold and base metals play, Independence Group, could also be targeted.
In the iron ore space it will be the big three that should experience support. Both Rio Tinto and BHP were up strongly in overseas markets overnight and one would expect Fortescue Metals Group to also be targeted today.
The Australian dollar only strengthened slightly against the US dollar, and is now hovering in the vicinity of US$0.736, suggesting recent support for Australian commodity producers should be sustained.
On the domestic front, analysts will be crunching the numbers on November retail sales data released by the Australian Bureau of Statistics yesterday.
The immediate reaction was poor, particularly towards consumer discretionary stocks, evidenced by a 1.5% decline in the S&P/ASX 200 Consumer Discretionary index (XDJ). Building on this theme, food was one of the few casualties resulting in the Consumer Staples index remaining relatively resilient.
Wesfarmers actually gain ground on a day in which the broader market came off substantially and the S&P/ASX 200 Consumer Staples index (XSJ) was only off 0.5%.
However, one area that performed well in the Consumer Discretionary sector was the clothing, footwear and personal accessory segment with a gain of 1.7%. This could draw attention to Australia’s largest ASX listed specialist footwear group, RCG Corporation.
Note 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.