Next Investors logo grey

All Ords shows strength despite oil attacks

Published 20-SEP-2019 14:54 P.M.


3 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 China trade war, Saudi oil crisis and low interest rates have all heightened global uncertainty. If you also include the uncertainty surrounding the impending US election in 2020, you would think this is a recipe for world markets to perform poorly. Yet the All Ordinaries Index as well as other world markets have continued to show resilience.

While the momentum on the All Ordinaries Index has slowed, it has risen over 5 per cent in the last five weeks with the charge led by the Financials sector last week and the Energy and Utilities sectors this week.

Stocks in the Financial, Material and Healthcare sectors continue to shine, as they have been rising steadily over the past couple of months. I believe these sectors, in particular, will present great opportunities to buy good quality stocks in the coming months. That said, while Healthcare has performed reasonably well this year, Financials and Materials have are due to play catch up with the rest of the market.

The Energy sector, on the other hand, has been volatile this week following the drone attacks on the Saudi oil facilities, which knocked out half of the countries production. The flow on effect saw crude oil prices rise sharply reaching over US$63 a barrel at the beginning of the week before falling back to around US$58 a barrel. Unfortunately, these attacks have been going on for quite some time, and as a result, tensions in the Middle East are high.

For those who may be concerned about oil prices rising further or even a potential oil crisis, you needn’t be, as half of the production that was lost has already been restored. Saudi oil executives are also expecting production to be back to normal and fully restored by the end of the month.

The best sectors this week include Energy up around 3 per cent followed by Utilities up 1.43 per cent, while the worst performing sectors were Consumer Discretionary and Financials, which were both just in the green.

As for the top performing stocks this week, it’s no surprise to see that Newcrest, Oil Search and Santos did well. After rising strongly earlier in the week, the stocks eased off later in the week, although all were up over 4 per cent. At the other end of the scale, Ramsey was down over 5 per cent early in the week after a major shareholder, Ramsey Foundation, sold a large shareholding to institutions at a heavy discount to the current share price.

So what do we expect in the Australian stock market?
After rising over 4 per cent in the past three weeks, momentum has slowed, as it has only risen 1 per cent in the last two weeks, which is a sign that the pull back into the low I have been expecting may be about to start soon. My expectation is that the All Ordinaries Index will fall below 6,400 points to possibly as low as 6,200 points in the next month.

If this occurs, stay clam because as I have stressed in the past, this is normal market behaviour and nothing to be concerned about. As for the medium to long term, I am still expecting the market to be bullish into 2020 and beyond. Therefore, once the low has occurred, I expect the market to rise with the potential for it make a new all-time high before the end of the year.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in book stores and online at

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.