Greetings and welcome to HotCopper’s The ASX Today for Wednesday of Week 14, I’m Jon Davidson and the wings of hope – or at least, an impatient frustration with constant bad news – have once again lifted the Aussie bourse higher, to ~8,600pts, which is undoubtedly a welcome shift to kick off the month of April.
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Let’s just hope it’s not all one big joke. Yesterday we had reports from the Wall Street Journal citing ‘Trump aides’ that America intends to exit Iran regardless of whether or not it controls Hormuz; Trump then came out overnight or early hours this morning, Aus time, to put a “two to three week” frame around that plan.
Since then, we’ve heard from the White House Press Secretary that there is to be yet another Donald Trump press conference about Iran tomorrow night, U.S. time, blah blah, let’s not bother getting too far ahead.
The big story is that the market likes what it’s hearing, but optimism is cautious: Brent Crude remains above $100 a barrel USD, which to me is the key psychological anchor that may indicate more than anything else whether the market stays risk-off or risk-on. One to watch as we head into Wednesday evening.
Gold remains down nearly -12% over the last month, but it’s had an uptick, climbing over $4,500 an ounce U.S.; the gap between WTI and Brent has gotten smaller, to ~$3/bbl, which you could interpret either way, really, and aluminium has retained gains from strikes on smelters earlier this week up over +7% MoM.
The U.S. 10Y bond yield remains spot on 4.3% at the time of writing as well, actually under by one pip, but let’s not make too much of that one.
All in all, Wednesday shows us there are green shoots of a recovery in risk asset appetite. That’s the big story if you ignore irrational property growth data from Perth that has been released this week.
Overnight, we get a presser from Albo about the fuel issue, so if we’re about to enter another mini-lockdown, green shoots might die off by Friday.
Let’s look around the traps. Koala (ASX:KOA) continued to climb Wednesday after its debut IPO yesterday. I covered that in this segment on Tuesday, but I’m touching on it again because it’s effectively a partial sentiment indicator – and trades remain fairly illiquid, which I think underscores a cautious optimism broadly.
Elsewhere, Electro Optic (ASX:EOS) continued to climb, which conversely suggests to me defence investors at least aren’t taking too seriously Trump’s latest mutterings of an exit from Iran; though the company did reveal a new $17M contract on Tuesday. Still, a contrarian signal to watch for those inclined.
Finally, more to that end – going against my previous thesis – a decline in Brent Crude prices hasn’t led to too much pain for Woodside (ASX:WDS), shares were down only a third of a percent in early arvo trades, suggesting to me that oil traders might be expecting more gains ahead. Interesting times.
That’s The ASX Today for Wednesday, I’m Jon Davidson, have a gregarious evening.
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