Failure to reach oil output agreement at Doha, Brent crude down in early trade, ASX SPI200 futures down 4 points

The big news over the weekend was the failure to reach an agreement on an oil output freeze at the meeting between OPEC and other oil producing nations in Doha, Qatar. While some analysts were hopeful on the ability to reach an agreement, it seems like a clear case of “buy the rumour, sell the fact”. I’ve included a chart of Brent Crude futures below which are down US$2.82 (-6.10%) in early trade this morning and I expect this to broadly weigh on commodity prices and resource sector equities today. While Saudi Arabia, the world’s largest oil producer, was originally open to a deal it made it clear that it was conditional on all OPEC members joining the agreement, including Iran who was not present at the agreement and stated they would not be a signatory to any self-imposed sanctions. 

On Friday we had Chinese GDP data out with an expected reading of 6.7% vs a 6.8% prior however there were some positive signs with both retail sales (Mar YoY) beating estimates of 10.3% with a reading of 10.5%, fixed asset investment (Mar YoY) increased to 10.7% vs 10.2% estimated and industrial production (Mar YoY) beat expectations of 5.4% with 6.8% growth. This follows on from a smaller decrease than expected in PPI data earlier in the week, suggesting we are beginning to see signs the Chinese economy is stabilizing.

European equity markets were broadly lower on Friday, FTSE100 (-0.34), DAX30 (-0.42%) and Euro Stoxx 50 (-0.21%). U.S. equities also traded lower, S&P500 (-0.10%) & Nasdaq100 (-0.25%) after the University of Michigan confidence survey, which assesses consumer confidence across personal finances, business conditions and purchasing power, missed estimates of 92.0 with a reading of 89.70.

Looking to the local market we can expect a weaker open this morning with ASX SPI200 futures down 4 points while the Australia Dollar is down 0.36%.


Source: Rivkin, Bloomberg, Updata

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

This article was written by James Woods - Global Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.