09/06/2014 - 10:39

Slow month for WA stocks

09/06/2014 - 10:39

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May was a stagnant month for the Deloitte WA index with the market capitalisation of Western Australia listed companies increasing by only 0.3 per cent to close the month at $153.6 billion.

Slow month for WA stocks
Deloitte WA managing partner Michael McNulty.

May was a stagnant month for the Deloitte WA index with the market capitalisation of Western Australia listed companies increasing by only 0.3 per cent to close the month at $153.6 billion. 

Commodity prices continued the trends seen in previous months, with steady gains across base metals offset by uranium and iron ore’s weak performances.

Gold and silver slid by 3.8 per cent and 1.5 per cent respectively during the month due to improving economic conditions in the US and Europe.

Investors have less of a need to hold gold, traditionally a safe haven metal in times of political or economic uncertainty.

“Although the local markets are feeling the impact form decreasing iron ore prices, investors can still seek comfort from international equity markets, which have reacted positively this month on the back of positive economic data,” Deloitte clients & markets partner, WA, Tim Richards said.

Nickel reached its highest price in 16 months with a 5 per cent increase, amid sustained supply concerns as tensions rose over Russia’s intervention in Ukraine, and Indonesia’s continued nickel ore export ban.

The Chinese purchasing managers index reached its highest level in five months at 49.7, indicating an uplift in Chinese business confidence.

Platinum and palladium continued their upward trend from the previous month, posting gains of 2.8 per cent and 4.1 per cent over April as result of supply disruptions in South Africa, a major supplier of the metals.

South Africa’s production has been affected by labour disputes since January, shutting down mines and adding to the most protracted shortfalls in global production since 2005.

Iron ore experienced a 13. 1 per cent price fall during the month.

China’s central planning agency said the country’s period of high steel demand had passed, paving the way for reduced consumption levels.

Uranium continued its downward spiral, falling by 8.1 per cent as a result of excess supply and discretionary demand.

International equity markets experienced a solid month, with the S&P 500, Nikkei and the FTSE 100 lifting by 2.1 per cent, 2.3 per cent and 1 per cent respectively.

The local equity market remained flat with the WA index and the All Ordinaries both posting small gains of 0.3 per cent and 0.1 per cent respectively during the month. 

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