Article / 02 November 2017 at 0:11 GMT

Today's Trade: Energy explorers gain on buoyant crude prices

Trading Desk / Saxo Capital Markets
  • The US dollar firmed as the Fed signalled it will consider lifting rates this year
  • Gold edged lower early on Wednesday as the dollar firmed
  • Most S&P500 firms have reported higher than expected earnings
  • Iron ore prices rebounded, but remained just below the key $60/tonne level
  • Oil settled near an eight-month high after smaller-than-expected falls in stockpiles

By Saxo Capital Markets Australia

Overnight and early trading
  • The S&P/ASX 200 made modest gains in early trading; it was up 0.13% to 5,945.30
    at 1109 AEST (0009 GMT).
  • The energy sector is in the spotlight today, thanks to firmer crude prices. Shares in Worley Parson were up 2.2% to $14.66 at 1047 AEST.
  • The Dow Jones Industrial Average and S&P 500 climbed to start November, after major indexes posted a flurry of records last month.
  • Investors and analysts have said they expect earnings growth around the world to keep supporting major indexes, which have continued to hover near all-time highs in recent sessions.


Buoyant crude oil prices have supported shares in listed energy firms in both Australia and the US. Photo: Shutterstock

  • The Dow industrials rose 57.77 points, or 0.2%, to 23435.01 after the blue-chip index posted its seventh straight monthly gain Tuesday, its longest streak since April 2012. The S&P 500 climbed 4.10 points, or 0.2%, to 2579.36, and the tech-heavy Nasdaq Composite swung between small gains and losses and closed down 11.14 points, or 0.2%, at 6716.53.
  • With nearly 70% of S&P 500 companies having reported as of the market close Wednesday, roughly three-quarters of those firms have exceeded earnings expectations, compared with the five-year average of 69%, according to FactSet.
  • Estée Lauder was among the biggest gainers Wednesday. Shares climbed $10.31, or 9.2%, to $122.12 after the beauty company reported an increase in organic sales and raised its forecast for fiscal year 2018.
  • Buoyant oil prices supported shares of energy firms, with Devon Energy and Marathon Oil also among the best performers in the S&P 500. The index’s energy sector rose 1.1%, with U.S. crude oil prices near their highest level of the year amid signs that production cuts by major suppliers are helping to rebalance the market.
  • Stocks inched slightly higher after the Fed left rates unchanged as expected but signalled it would consider lifting them before year’s end amid signs the economy was gaining momentum.
  • The dollar was also slightly higher after the Fed’s statement, which investors and analysts said offered few surprises.
  • Some investors and analysts have said formal details on the next chair of the Fed or on potential changes to taxes will also be critical for understanding the future path of U.S. monetary policy. The Wall Street Journal reported after the market closed that the White House has notified Fed governor Jerome Powell that President Donald Trump intends to nominate him for the role.
  • Elsewhere, the Stoxx Europe 600 advanced 0.4%. Clothing retailer Next fell 9.1% after the firm’s earnings, while shares of Standard Chartered declined 6% after it reported higher costs and lower revenue than expected.
  • Gains in technology shares boosted major Asian bourses. Japan’s Nikkei Stock Average closed up 1.9% in its biggest daily point gain since May, while Hong Kong’s Hang Seng Index rose 1.2%.
  • The US dollar firmed as the Federal Reserve held interest rates steady and signalled it will consider lifting them before year end. This was the last Fed meeting before President Donald Trump is expected to name a successor to Fed Chairwoman Janet Yellen. Market attention has focused on Jerome Powell, a current Fed board member and former executive at the Carlyle Group, as Trump’s most likely pick. The announcement is expected today.
  • Fed officials forecast at their September meeting that they would raise interest rates for a third time this year, and three more times in 2018. Ahead of Wednesday’s statement, futures prices suggest a 98% probability that the central bank raises interest rates by the end of this year, according to the CME Group.
  • Source: Bloomberg,,, CNBC
Local markets
  • Bank of New York Australia ADR Index is up 1.3% to 276.0, BHP Billiton ADRs are up 2.5% to $A27.38 equivalent, a 1.6% premium to last Sydney close, Rio Tinto ADRs are up 2.3% to $A63.93 equivalent, a 8.7% discount to last Sydney close.
  • Gold edged lower early Wednesday as the dollar firmed with investors awaiting hints on the Fed's monetary policy stance following its two-day meeting. The market is also looking forward to the impending naming of the next Fed chair, the Bank of England policy meeting today and more data, including U.S. payrolls figures on Friday. Spot gold was down 0.1% at $1,269.86/oz. U.S. gold futures for December delivery were nearly unchanged at $1,270.90. Gold stocks in Toronto recovered on Friday adding 0.8%. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR.
  • Crude oil settled near an eight-month high after a closely watched U.S. government report showed smaller-than- expected declines in domestic crude and gasoline stockpiles. Futures closed down 0.2% in New York after earlier topping $55/barrel for the first time since early January. The government’s tally of oil and gasoline held in US storage tanks failed to register withdrawals as large as those reported by the industry-funded American Petroleum Institute on Tuesday. A 5.2% October rally in the benchmark US crude grade was largely fuelled by the determination of Saudi Arabia, Russia and other major oil producers to extend output curbs well into 2018. While a formal decision to extend the caps may not be made at a November 30 meeting, it’ll come sooner or later, according to PIRA Energy Group, a unit of S&P Global Platts.
  • Meanwhile, overall Opec production dropped 180,000 barrels a day in October from September to 32.59 million a day, data shows. West Texas Intermediate crude for December delivery fell 8 cents to settle at $54.30/b on the New York Mercantile Exchange, just pennies off the Tuesday close at a level not seen since February. Brent for January settlement slipped 45 cents to end the session $60.49/b on the London-based ICE Futures Europe exchange. The international benchmark traded at a premium of $5.98 to January WTI. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY.
  • Iron ore prices rebounded but remained just below the key $60/t level. The weakness in prices over the past few days has now enticed some traders back into the market. However investors have also been active, with futures moving higher to the point that the futures curve on Dalian Exchange has now moved into contango for the first time in quite a long time. Spot iron ore added 1.4% or $0.83 to close at $59.35. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL.
  • Base metals surged higher on the back of stronger fundamentals and increasing optimism about the impact electric cars will have on demand. Nickel once again led the sector higher, surging another 4% after strong gains earlier this week. Investors, buoyed by comments from the LME week, continue to pile in. Futures on the Shanghai Futures Exchange were up by the exchange’s limit in trading late yesterday, while on the LME it hit $13,000/t for the first time since June 2015. Nickel stocks: IGO, WSA.
  • Zinc was also stronger after another large drawdown in inventories at LME warehouses. BHP Billiton Ltd., the world’s biggest miner, wants to own even more copper deposits as electric cars drive an increasingly bullish outlook for metal. “We want more copper resources in our portfolio,” Daniel Malchuk, head of BHP’s Minerals Americas division, said in a speech at Bloomberg Intelligence’s LME Week Forum in London. The company is already the fourth-largest copper producer. Malchuk said that an electric car will use about 80 kg  of copper, quadruple the amount used in a regular petrol car, and that some models could need up to 105 kg. With BHP forecasting 140 million electric vehicles on the road by 2035, that would equate to about 12 mln tons of demand from the sector over the period, he said. Copper stocks: OZL, SFR;  Aluminium stock: AWC
  • Companies trading ex-dividend today: Bank of Queensland.
  • Bapcor (BAP): Annual Meeting Scheduled.
  • BHP Billiton (BHP): Wants More Copper Mines as Electric Car Fever Drives Prices.
  • Boral (BLD): Annual Meeting Scheduled; NOTE: Tuesday: Boral May Lift Outlook Amid Warmer Australia: Deutsche Bank.
  • CBA (CBA), Westpac (WBC), ANZ Bank (ANZ): Australia to Introduce Mandatory Credit Reporting for Lenders; South Australia Bank Tax Rejected by Upper House: Australian; ANZ Appoints Chris Raciti as CEO Korea.
  • Challenger (CGF): May Be Alternative Lender in Craveable Debt Deal: AFR
  • Credit Corp (CCP): Annual meeting scheduled.
  • Downer EDI (DOW): Annual Meeting Scheduled.
  • Eclipx Group (ECX): FY Results Expected.
  • Fairfax Media (FXJ): Annual Meeting Scheduled.
  • National Australia Bank (NAB): FY Results Expected; NOTE: Adj. Net Income Est. $A6.68bn (15 analysts, range $A6.57bn-$A6.85bn).
  • Perpetual (PPT): Annual Meeting Scheduled.
  • Prospect Resources (PSC): Zimbabwe Lithium Mine to Go Ahead: The Source.
  • Rio Tinto (RIO): Rio Tinto Says Africa Key to Growth Even After Costly Missteps.
  • Seven West Media (SWM): Annual Meeting Scheduled.
  • Telstra (TLS): Investor Day Scheduled; NOTE: FY18 Income Target $A28.3bn-$A30.2bn; Ebitda $A10.7bn-$A11.2bn; Payout 70-90% Underlying Earnings.
Broker upgrades, downgrades
  • Bendigo & Adelaide (BEN AU): Cut to Sell at Shaw and Partners; Price target $A11.19.
  • Domino’s Pizza Enterprises (DMP AU): Domino’s Pizza Enterprises Upgraded to Buy at Morningstar.
  • Estia Health (EHE AU): Raised to Equal-weight at Morgan Stanley; PT $A3.45.
  • Investa Office (IOF AU): Cut to Neutral at Credit Suisse, PT $A4.58.
  • Link Administration (LNK AU): Raised to Neutral at Credit Suisse.
  • Vicinity (VCX AU): Vicinity Raised to Neutral at Credit Suisse; Price target $A2.65.
  • Platinum Asset (PTM AU): New Sell at Shaw and Partners, PT $A6.30.
ASX Company releases
  • Thursday: AGM: Perpetual Ltd, Fairfax Media Ltd, Boral Ltd, Seven West Media Ltd, Credit Corp Group Ltd, Downer EDI Ltd, Bapcor Ltd. Earnings: National Australia Bank Ltd, Eclipx Group Ltd.
  • Friday: AGM: Nanosonics Ltd, Spark New Zealand Ltd. Earnings: Ten Network, Genworth Mortgage Insurance Australia Ltd.

Bullish palladium outlook

Palladium has been outperforming other precious metals and it has spiked last night to retest its 2017 high of $1,000, which still remains as a key psychological level.

However yesterday’s price action suggest the upside momentum should continue, to the top side. The next resistance level would be $1,095 (the 2001 high) and we would like to see another daily close above $1,000 to maintain our bullish outlook.

Palladium trend
Create your own charts with SaxoTrader; click here to learn more

Sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters

– Edited by Robert Ryan

For more on forex, click here.

Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets.

Saxo Capital Markets (Australia) Pty Ltd | A part of Saxo Bank Group
ABN 32 110 128 286 | AFSL 280372
Level 25, 2 Park Street SYDNEY NSW 2000
Phone: +61 (2) 8267 9000 | Fax: +61 (2) 8267 9050
Please visit our website at:
The daily outlook is brought to you by Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286, AFSL 280372 (Saxo Capital Markets), in association with which is the property of Saxo Bank A/S, the parent company of Saxo Capital Markets. is a social trading facility offering clients of Saxo Bank Group access to in-depth market news, commentary, analysis and much more.
The content of the daily outlook should not be considered as a ‘personal’ or specific investment advice catered for your specific need, objectives or financial situation, or be construed as an express or implied promise, guarantee or implication by Saxo Capital Markets that clients will profit from the strategies expressed or that losses in connection therewith can or will be limited.
None of the information contained in the daily outlook constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy. Saxo Capital Markets; shall not be responsible for any loss arising from any investment based on any forecast or other information contained in the daily outlook. Past performance is not a reliable indicator of future performance. Information contained in this daily outlook may have previously been distributed to; and acted upon; by other clients and persons who have shown interest in Saxo Capital Markets, as well as internal affiliates/employees of Saxo Capital Markets. Any trade ideas or positions contained herein relating to products or services offered by Saxo Capital Markets may be inconsistent to trades/positions entered into by Saxo Capital Markets and/or its affiliates. Further, any information contained may consist of opinions and views of the ‘Sales Trading Desk’ as a team, however does not reflect the ‘specific’ opinion of Saxo Capital Markets.
Trades in accordance with the information contained in the daily outlook, especially, but not limited to, leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the daily outlook do not occur as anticipated. Prior to making any investment or entering into any transaction, you should carefully consider your financial situation and consult your independent financial expert in order to understand the risks involved and ensure the suitability for you of any investment or transaction decision you enter. Any information or opinions in this material are not intended for distribution to, or use by, any person in any jurisdiction or country where such distribution or use would be unlawful. Please refer to our Combined Financial Services Guide & Product Disclosure Statement available via Please also consider whether acquiring or continuing to hold financial products is suitable for you, prior to trading and investing.
If you would like to unsubscribe from the Daily Outlook, please reply ‘Opt Out’ to this email with your Client ID.
Terms & Agreement | Disclaimer | Financial Services Guide | Privacy Policy | Contact Us |


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail