The volatility of the Australian share market caused it to end in an all-season low on the third week of March 2018. The S&P/ASX 200 ended with a decline of 13 points at 5937. The Australian dollar rose against the US Dollar after the US Interest rates rose by 25 basis points as per the US Federal Reserve. The range rose from 1.5% to 1.75%. The US Federal Reserve also lifted its forecast range for 2019 and 2020. The mining and energy stocks ended the day on a strong note.
This usher in the significant volatility that experts had been seeing in the US stock market for quite a while now. The decline of the US dollar allowed the prices of the commodities to rise including the price of aluminium, zinc and copper.
The oil prices have risen significantly as well. On the other hand, the energy and mining sectors have held their ground and emerged as the steady winners in the dubious market.
Bank shares are taking a step back
The banks are once again facing a drop in share prices. The ANZ Bank Share Price Australiawas down by 0.42% at the end of the day as of 22 March 2018. This marked the eight days of the royal commission spotlight. As per ANZ, their exit from asset finance was following the increase of lending risks to an extreme.
The Commonwealth Bank share prices fell by 1.2% to a square $74.87. Transurban, along with other infrastructure stocks suffered notable losses that ranged between 1.8% and 2.5% on the same day.
A rise in the Australian dollar
The Australian dollar saw a sharp rise as a result of the expected interest rate hike of the US Federal Reserve. The Aussie dollar traded at USD 77.46. The jobs data rang weaker than expectations with the unemployment rate at 5.6% in February.
Thi was 0.1% higher than what the economists of both the countries had expected for 2018. The employment increased by 17,500 instead of the 20,000 mark the market had been predicting this year. The last time there was a record fall in the employment rate was back in September 2016. The Jobs Data for the last year showed a record 17 month long run that added over 400,000 positions to the Australian labour force in the last 12 months only. Since 2016, over 518,000 jobs have come into existence.
Oil and energetic share prices are steadily rising
Amidst all the hullaballoo, oil share prices have been on the rise. The Brent Crude oil share is leading brigade by a gain of 7 cents to a whopping $69.54 a barrel. This comes after a sharp drop in the US dollar values and an unpredicted drop in the US oil supply.
This was after the analysts reported a weaker US imports market and a stronger export strategy. US oil production entered another weekly record, and the gasoline stockpile prices fell once again after the last week’s trysts. This is creating a demand for oil and a rise in the oil share prices.
As a direct response to the US Federal Reserve rate hike, China elevated the interest rates by square five points on seven-day reverse repurchase agreements. This hike in rate is identical in magnitude after the Federal Reserve’s December hike.
PBOC has raised the rate on the seven-day reverse repos by 5 points. Analysts do not view this as a move by the Chinese stock exchanges to tighten the monetary reserves and conditions in the country or the global market. There are responses to the amount of money available.
What does the neighbour markets say?
The Reserve Bank of New Zealand has seen a record low cash rate ever since their economic downfall in November 2016. Analysts saw a decline in the cash rate at 1.75%. As per expert opinion, the monetary policy will remain in the same line for quite a few days to come. There is no expectation of a quick redressal as the share prices keep yo-yoing.According
to Annette Beacher, a strategist with TD Securities, “The market is piling up fiscal stimulus on top of an already wobbly economy. It has come close to its breaking point.” This might mark the beginning of the bear market for the New Zealand investors already. The market does not expect to see a rate hike anytime soon this year. 2017 has left a blazing trail that will be difficult to follow.
The market is eagerly volatile, and it is the ideal chance for short-term investors to test their fortunes. With China’s interest hikes as a response to an increase in the US Fed’s move and a sharp rise in the valuation of the Aussie Dollar, the Australian share market might just be in for a rewarding run shortly.