Investment Ideas From the Edge of the Bell Curve
The Australian sharemarket’s three-week winning streak came to an end today as escalating Middle East tensions drove investors away from equities, pulling shares down from the record highs seen a week earlier.
The ASX 200 closed today’s session down 0.67% at 8,150 points, resulting in a 0.8% weekly loss, its first since early September.
Nine out of the ASX’s 11 sectors finished lower as Investors shifted from equities to oil following US President Joe Biden’s statement that the US was “discussing” a potential Israeli retaliatory strike on Iranian oil assets.
Oil prices surged over 5% in response, with West Texas Intermediate and Brent Crude maintaining most gains during Friday’s trading, pushing the energy sector up 1.8%.
Woodside saw a 2.2% increase to $26.64, while Santos rose 2.1% to $7.30.
Smaller oil and gas companies also benefited from the rising tensions. Strike Energy climbed 9.5% to 23¢, Horizon Oil jumped 7.5% to 21.5¢, and Karoon Energy increased 2.2% to $1.65.
The mining sector suffered the most, indicating a slowdown in the previous week’s sector rally sparked by China’s renewed stimulus efforts. BHP fell 1.7% to $44.58 and Rio Tinto dropped 1.9% to $3.02.
Banks also declined, with Commonwealth Bank down 1.4% to $132.74 and Westpac falling 1.9% to $30.14.
Small-cap tech firm Electro Optic Systems gained 5.1% to $1.54 as traders anticipated increased demand for its defence technology amid rising Middle East tensions.
Light & Wonder shares surged 7.8% to $140.69 following the gaming company’s announcement of plans to develop a new version of its popular ‘Dragon Train’ game.
Regal Partners rose 2% to $3.55 as the asset manager’s funds under management exceeded $17 billion. The company is currently in takeover talks with Platinum Asset Management, and both are entering due diligence this week. Platinum shares increased 1.7% to $1.23.
Defence technology firm Electric Optic Systems [ASX:EOS] has seen its stock rise 5.8% today, standing out among ASX-listed companies as concerns over potential Middle East conflicts intensify.
This uptick mirrored a similar 6% jump in July when the company reported a significant increase in first-half 2024 revenue, driven by higher weapon systems orders from an unnamed Middle Eastern client.
EOS disclosed revenue of $142.6 million for the six months ending June, marking a 92% increase compared to the same period last year.
The company’s shares have climbed over 15% since early September, highlighting investor interest in defence-related stocks amid geopolitical uncertainties.
Recent geopolitical tensions in the Middle East have once again brought attention to the volatile nature of global oil markets. As a critical oil-producing region, any instability in the Middle East can have far-reaching consequences for oil prices worldwide.
Prices have spiked today as some viewed Biden’s comments as a tacit approval of Israeli strikes on Iranian oil refineries, although nothing directly was said.
If the conflict continues to grow, we could see it affect major oil-producing nations or key transportation routes like the Strait of Hormuz. Leading to actual supply shortages rather than just the threat of them.
But as we’ve seen even the threat of such disruptions can cause prices to rise as traders and countries rush to secure supplies.
Brent Crude prices are now up 8% in the past week, with an almost 5% spike overnight.
How much further can they go in this conflict?
Oil prices +8% v last week – just a flick off the bottom in historical context with min impact for Aust motorists. How Israel responds to Irans missiles is key – if proportional then oil prices back down but if it attacks Iran oil prod/nuclear facilities then could see big spike. pic.twitter.com/g2900DR7hq
— Shane Oliver (@ShaneOliverAMP) October 4, 2024
The Australian share market is experiencing a significant downturn this afternoon, with the ASX 200 falling 0.8% to 8,140.3.
This decline is widespread across the index, affecting 9 out of 11 sectors, with mining stocks leading the losses at 1.3%. The market’s performance is largely influenced by rising tensions in the Middle East, particularly concerns about potential Israeli retaliation against Iran’s oil assets.
Oil prices have surged to their highest levels in about a month following U.S. President Joe Biden’s comments about discussing possible retaliatory attacks on Iranian oil facilities by Israel.
This geopolitical uncertainty has led to substantial gains for energy stocks, which are up 2%. Major energy companies like Woodside and Santos have seen increases of 2.6% and 1.75% respectively.
In contrast to the energy sector’s gains, mining shares are declining as the momentum from last week’s rally, sparked by new Chinese stimulus measures, begins to wane.
The mining sector has dropped 1.34%, with iron ore giant BHP down 2.1% to $44.43. Iron ore prices in Singapore have also dipped 1%, falling just below US$108 per tonne after last week’s rally.
Several individual stocks are making notable moves. Light & Wonder shares have jumped over 7.5% following news of its plans to proceed with the revamped ‘Dragon Train’ game, despite recent intellectual property disputes.
Woodside has reported a fatality at its Beaumont Clean Ammonia site in Texas, leading to a temporary stand-down of site operations pending investigation.
Regal Partners has seen a slight increase in share price as it enters due diligence with Platinum Asset Management for a potential takeover, while also reporting over $17 billion in funds under management.
Meanwhile, Infratil’s CDC data centre business hit the news after AFR reported a significant value increase of around $287 million in just three months, reflecting growing excitement in the data centre sector.
Here’s the latest from our Fat Tail Daily video series.
Something a little different this morning.
In our latest video, our resident geo, James Cooper, Editor of Diggers and Drillers, sat down with mining fund manager Hedley Widdup, CEO of Lion Selection Group.
When two former geologists sit down to talk about the commodity markets, its worth a listen.
The pair discuss the upside for gold juniors amid a rally that’s mostly left the small-tier stocks behind. Both geo’s see enormous upside for the junior sector.
Hedley and James also discuss China’s latest stimulus announcement and what this means for resource stocks.
To read James’s original article, click here.
Click below to watch the discussion.
Good morning. Charlie here,
ASX 200 Futures signal a fall in the major benchmark and wider market today as the the conflict in the Middle East again escalates.
This phase of the conflict began as Israel launched its ground invasion into Southern Lebanon earlier this week. Iran then responded with a missile barrage of around 180 rockets towards Israel.
Israel has vowed to retaliate to Iran’s attacks while also increasing its activity in Beirut amid its fight with Hezbollah.
Oil surged over 5% to around US$73.7 per barrel for West Texas, extending the week’s surge after President Biden refrained from directly condemning the possibility that Israel may attack Iran’s oil facilities.
Wall Street closed lower on the news, as markets have little else to focus on in the meantime. Q3 earnings for the S&P 500 and September’s economic data kick off next week. Until then, markets are watching the Middle East with caution.
A large port strike in the US is also likely to become bigger news in the coming week. East and Gulf ports remain closed as the strike passes its third day.
Early signs of supply chain stress are beginning to build, with thousands of containers being dumped wherever possible and surcharge costs skyrocketing. So far, the Biden Administration has vowed not to intervene in the dispute.
On the ASX today, we’ll be watching the Platinum Asset Management and Regal Partners takeover bid progress, and the national housing market.
Name | Value | % Chg | |
---|---|---|---|
Major Indices | |||
S&P 500 | 5,699 | -0.17% | |
Dow Jones | 42,011 | -0.44% | |
NASDAQ Comp | 17,918 | -0.04% | |
Russell 2000 | 2,180 | -0.68% | |
Country Indices | |||
UK | 8,282 | -0.10% | |
Germany | 19,015 | -0.78% | |
Euro | 4,921 | -0.85% | |
Japan | 38,552 | +1.97% | |
Hong Kong | 22,113 | -1.47% |
Name | Value | % Chg | |
---|---|---|---|
Commodities (USD) | |||
Gold | 2,665 | -0.17% | |
Silver | 32.04 | +0.61% | |
Iron Ore | 108.00 | -0.94% | |
Copper | 4.4959 | -2.18% | |
WTI Oil | 73.86 | +5.38% | |
Currency | |||
AUD/USD | 68.45¢ | -0.58% | |
Cryptocurrency | |||
Bitcoin (USD) | 60,766 | +0.05% | |
Ethereum (USD) | 2,350 | -0.88% |
4:51 pm — October 4, 2024
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Investment ideas from the edge of the bell curve.
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