BHP and Qantas to Report This Week

The major US indices closed slightly lower on Friday as the downtrend that was triggered by North Korean tensions continues. Despite this the Dow is still up over the prior month although the S&P500 is at a five-week low. A pullback in these markets is not surprising considering the almost straight-line trend higher since the US presidential election in November last year.  

BHP Billiton (BHP) and Qantas (QAN) are set to report this week and BHP will have to hope that fund managers are happy with the result as a group of them have been agitating for change at the miner. Specifically, they want BHP's shale assets to be sold off and tighter capital management. So far the battle between the BHP board and the fund managers is at a stalemate as expected strong financial results due to rising iron ore and coal prices have given the board some breathing room. Nevertheless, a weaker than expected result could give the fund managers the impetus to resume their push for change.

Gold had a run at $1,300 per ounce on Friday and actually just reached it before retreating back to the mid $1,280's. Gold will need a decisive break out from this region in order to push higher. Oil climbed almost 3% on Friday as a series of bullish news pushed the commodity higher but the WTI price is still only at $48.60. The rebalance of the oil market is well underway according to inventory data however the market is heavily focussed on the fact that shale supply continues to increase. Despite the US output increases, both crude oil and gasoline inventories are now within their five-year ranges after being well above them for some time. The trajectory of crude inventories is clearly down and it will be surprising if the market will be able to ignore continued drawdowns.    

Data Releases:

No Significant Data

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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.