The Winners and Losers
A rally in global oil prices has underpinned strength in energy stocks, supporting the broader ASX consequently. The price of Brent Crude topped $US80.00 per barrel briefly last week, as supply side concerns relating sanctions on Iran coupled with the short-term effects of US Hurricane Florence on oil producing regions within the US drove traders to buy oil. Santos rallied over 3 per cent on the news, while Woodside climbed one and a half per cent, taking the energy sector’s gains to around 1.3 per cent over the last 5 days.
The turmoil relating to the US-China trade war and its effects on commodity prices began to manifest in materials stocks last week, but the real laggard was the health care sector. Granted this is in part because following remarkable YTD gains for the sector, it has farther to fall when sentiment shifts. However, with the dividend yields quite lower, and valuations quite stretched on the large-cap health care stocks – such as CSL and Cochlear – health care companies have found themselves more prone to falls when macro factors sap risk appetite.
The little Aussie battler
The Australian Dollar received a boost from an increase in risk appetite last week, on the back of what were at the time easing trade war tensions and better than expected employment figures. While the global growth outlooked has soured with the new escalation in US-China trade war, the AUD/USD has benefited from an out of vogue greenback, forming a range between 0.7150 and 0.7200. The story isn’t quite the same across the other major Aussie Dollar pairs, with safe-haven plays into the EUR and GBP (along, of course, with the perennial risk-off favourite, JPY) by virtue of greater optimism regarding Brexit and the region’s growth prospects forcing the AUD lower against those currencies.