As investors rushed in to “buy the dip”, Australian stocks have recovered from yesterday’s worldwide sell-off. The ASX 200 finished 0.8 percent higher at 7,309 points, with gains led by banks and miners. Early in the day, the benchmark index rose as high as 1.4 percent before losing steam as the afternoon progressed. Pilbara Minerals (+5.5%), CIMIC Group (+4.5%), Pointsbet (+4%), Unibail Rodamco Westfield (+3.5%), Fletcher Building (+4.5%), and Oil Search (+3.6%) were among the top performances. Westpac, ANZ, and NAB all climbed between 1% and 1.2 percent, but Commonwealth Bank rose by only 0.8 percent (to $98.42).
Evolution Mining (-2.9%), Westgold Resources (1.9%), and Silver Lake Resource (-2%), as well as Altium (-5%), Hub24 (-3.9%), and Elders (-3.9%), all experienced significant losses (-2.6pc). Spot gold fell 0.1 percent to $US1,808.56 per ounce.
BHP is considering quitting the oil and gas business
Bloomberg News reported on Tuesday that global miner BHP is exploring a multibillion-dollar departure from oil and gas as it looks to accelerate its transition away from fossil fuels, citing individuals familiar with the subject. The price of BHP rose 1.3 percent to $49.89. According to the article, the world’s largest miner was examining its petroleum business and considering alternatives such as a trade sale, but the discussions were still in the early stages and no final decision had been taken. “BHP does not comment on rumour or conjecture,” said Judy Dane, a representative for the firm.
As calls for a transition to greener types of energy grow louder, mining firms throughout the world are under increasing shareholder pressure to minimize their carbon footprint and adopt strict climate measures to decrease emissions.
BHP’s oil and gas portfolio, which is focused on the US Gulf of Mexico, eastern Canada, and Australia, is valued at $US14.3 billion by RBC analysts. “We can see why management could be contemplating a departure,” they said in a note, “with growing ESG environmental, social, and governance challenges confronting the industry, but also as this firm possibly enters a re-investment period.” the price changes make it difficult for those are involved in the financial market to make the specific decisions, thus, in this case, the use of the candlestick breakout to measure the true or false breakouts. This tool appeared to be more beneficial in this exact case due to its individual approach.
BHP is considering options for its oil and gas business, according to two banking sources who declined to be identified because the discussions were private.
BHP, whose iron ore and copper businesses provide the majority of its revenue, sold its shale operation to British oil company BP for $US10.4 billion in 2018.
The Australian currency faces a ‘high danger’ of additional depreciation
The Australian dollar has fallen to 72.95 US cents down 0.5% by 4:20 p.m. AEST, its lowest level since late November. This came after the ABS announced preliminary statistics showing a 1.8 percent decline in retail sales in June. The result was worse than predicted, owing to Victoria’s fourth lockdown and Greater Sydney’s “stay at home” orders issued at the end of last month.
“The reintroduction of lockdowns has considerably raised the downside risks to Australia’s near-term economic outlook,” said Carol Kong, a currency analyst at Commonwealth Bank. In South Australia, Victoria, and significant sections of NSW, half of Australia’s population is under lockdown.
“We believe the Australian dollar has a significant chance of falling below 70 US cents in the next weeks, particularly if Australian 10-year bond rates fall below 1%, as our interest rate strategists predict.”
Many experts believe the Reserve Bank will reverse its prior decision to decrease the amount of stimulus money flowing into the economy. The RBA stated two weeks ago that beginning in early September, it will reduce its bond-buying program to $4 billion per week. If Greater Sydney or Victoria remain in lockdown at the RBA’s next meeting, the decision is expected to be reversed.
‘Buy the dip’ helps Delta overcome its worries
Overnight, Wall Street finished significantly higher. The Dow Jones index rose 550 points (1.6%) to 34,512, its highest level in nine months, as it recovered from its worst day in nine months. The S&P 500 gained 1.5 percent for the first time in four days to 4,323. The S&P 500 had its best day since March. The Nasdaq Composite, which is heavily weighted in technology, gained 1.6 percent to 14,499, its first rise in six days.
“The market is approaching a buy-the-dip mindset,” said Chuck Carlson, CEO of Horizon Investment Services in Indiana. As global immunization efforts gain traction, raising fears about the highly infectious Delta variety, which is now responsible for the bulk of new coronavirus illnesses, has triggered sell-offs in recent sessions.
Another evidence of market comfort was the decline of 12% in the ‘fear index’ (VIX) (to 19.7 points). Bitcoin has failed to rebound from its recent drop below $US30,000, which triggered a $US90 billion sell-off throughout the entire crypto market on Tuesday. Bitcoin was down 3.4 percent at $US29,863, having shed more than half its value since April.
Brent oil futures fell 0.6 percent to $US68.96 a barrel due to fears over oversupply. Since early July, when it traded above $US77, its highest level since late 2018, the international oil benchmark has seen significant declines.
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