ASX 200 Holds Above 6,000

It was another fairly quiet night for US stock markets with the Dow Jones and S&P500 closing just slightly higher. Snapchat shares (NYSE: SNAP) closed 14% lower following the release of weak earnings although it was also revealed that China's Tencent took a 12% stake in the company. The ASX 200 opened lower yesterday but rallied throughout the day to finally close unchanged. The rally ensured that the index continues to hold above the 6,000 level and make new nine-year highs.  

Bitcoin had another wild night, first spiking around US$300 to US$7,800 and then falling US$700 back to US$7,100. At the moment, bitcoin is trading around US$7,300 but the episode shows the extreme volatility of the cryptocurrency. When measured mathematically, the volatility of bitcoin is almost unlike any other asset class in terms of the sheer magnitude and frequency of large price moves. If bitcoin is ever going to be widely used as a medium of exchange, the level of volatility would need to reduce significantly.

Notwithstanding a small fall overnight, iron ore prices appear to have stabilised at around the US$60 per tonne mark after falling from levels around US$75 per tonne reached in early September. The price falls have weighed heavily on Fortescue Metals (FMG) share price which got as low as $4.66 a few days ago but has since recovered to $4.90.

Oil prices fell overnight with WTI oil dropping back below US$57 per barrel after US inventory data showed a build in crude inventories last week when markets were expecting a draw. Considering the strong run in oil over the prior weeks, it is not surprising that we are seeing a pullback.

Data Releases:

–    China CPI & PPI 12:30pm AEDT

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This article was written by William O'Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.