Equity markets quiet in the US, higher in Europe, absence of an oil price bounce a good thing for equities, ASX futures 15 points higher
While there's little doubt that the broad, month-long up-trend of the ASX 200 has begun to plateau and move sideways outside of its recent trend channel (see the first chart), it is certainly notable that investors are not seeing financial markets as a particularly scary place at present. This lack of volatility may have a lot to do with what's happening in today's second chart, which shows a range-bound WTI oil price that is no longer spooking investors. I had a conversation with an economic strategist yesterday and we both agreed that oil doesn't have to be a directional trade. There are so many in this market who are waiting for a big bounce or a crash lower in oil markets; however, as recently discussed, the oil price at this level is doing a fine job of allowing the world to make some assumptions on medium-term energy input costs and this likely explains a lot about the way equity markets seem to be quite freely moving higher without the usual corrective retracements that one might certainly expect when looking at the ASX 200.
The environment for commodities in general (ex gold) may also be improving. Commitment of trader data out last week shows that money managers remain buyers in oil trades, copper has ticked up a little and long US dollar bets have come off. We're not seeing any decent directional trends in important base metal markets like iron ore and copper yet, but the continuation of the sideways movement in the US dollar is likely bringing some confidence to commodity markets in general.
Gold is one commodity that is having a rough time. As today's last chart shows, gold certainly is trending - downward. It should start hitting some buying support between US$1,170 and US$1,200; however, easy money in equity markets and the ongoing lack of demand for inflation insurance will see both gold and silver struggle in this environment.
Quite a big day for Australian reporting today - BHP tops the list of some other decent names who will report interim and full year earnings today:
- AHY Asaleo Care
- BHP BHP Billiton
- BRG Breville Group
- CVN Carnarvon Petroleum
- FLT Flight Centre Travel Group
- GNE Genesis Energy
- HSO Healthscope
- MCS McAleese Group
- MRP Mighty River Power
- ORA Orora
- OSH Oil Search
- QBE QBE Insurance
- QUB Qube Holdings
- SCG Scentre Group
- SFH Specialty Fashion Group
- SLM Salmat
- SPO Spotless Group Holdings
- SUM Summerset Group
- TOX Tox Free Solutions
- TRY Troy Resources
- VED Veda Group
- VRL Village Roadshow
- VRT Virtus Health
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