US stocks stable but oil sinks….. where to from here?
A fairly “uneventful night” last night (we like that), with the SP500 falling by 0.1%
US stocks were actually up during the trading session, but erased gains, as a slump in oil (-2.98%), sank energy shares, overshadowing a rally in Apple Inc. amid concern the rout that’s wiped out $2 trillion in global equity value the past week isn’t over.
Treasuries advanced, while the dollar retreated.
“The market moves the last couple of days were so extreme you’d actually want to see something a little more normal,” said Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, which has about $3 billion under management.
“People are trying to get ready for next week when the Fed comes out. Volumes are up and people are positioning themselves for the Fed, the election and whatever other headaches are going on.”
So what will happen next week?
We see a 20% chance that the US fed will raise rates in September (vs. analyst expectations of over 37%)….. but feel that the “hawkish tone”, will continue to see inflows to the USD….
As we’ve been noting, a higher USD isn’t positive for commodities and we are seeing this at the moment with a rout in oil stocks….
We do however, expect investors to jump back into high-yielding stocks and pick up fully franked dividends, as returns on cash are effectively 0.00….
Our PAR, SW1, LPI positions are going really nicely and look to be “immune” to the recent market sell off…
Keep a look out for next week’s new PEAK Opportunity….
The SPI is down 18 points this morning.
Niv Dagan is an Executive Director of Melbourne based boutique funds management and corporate advisory firm, Peak Asset Management (www.peakassetmanagement.com.au). He is also a regular financial commentator on Sky Business