Jarden Brief: Big oil booms after obstinate OPEC cuts production

Outside OPEC's building in Vienna yesterday. The OPEC+ alliance including Saudi Arabia and Russia mulled production cuts after US crude prices fell from about NZ$174 mid-year to about $139. Photo / AP

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

International

US

Momentum in US markets slowed this morning, with the S&P 500 falling 0.3 per cent and the Nasdaq composite down 0.6 per cent.

Market movements were driven by OPEC+ members agreeing to cut production by almost two million barrels per day to keep oil prices up, seemingly in defiance of US pressure.

The White House issued a statement in response, saying President Biden was 'disappointed' by OPEC+'s decision and that the government would consult with Congress to find additional tools and authorities to combat OPEC's control over oil prices.

Petrol-related stocks such as Schlumberger and Exxon Mobil traded well in response, rallying by 5.8 per cent and 4.7 per cent, respectively.

At the single stock level, dual listed Chinese stocks performed well in line with the Hang Seng rally, holding up against negative market momentum – with Chinese e-commerce giant, JD.Com climbing 1.8 per cent and Alibaba up 0.6 per cent.

Elon Musk's private space ventures business, SpaceX, succeeded in carrying out its latest mission this morning, launching four people to the International Space Station for NASA.

Rest of the World

Hong Kong's Hang Seng index surged by 6.1 per cent to catch up with recent moves in global markets, reopening after China's markets were closed for Golden Week celebrations.

The week-long holiday was marred by a surge of Covid-19 cases, which returned to two-week highs despite officials' attempts to keep a tight lid on infections.

Media outlets have suggested that the sudden increase in cases implies that many individuals did not follow advice against travelling during the holiday.

Markets also turned their attention to a speech made by UK Prime Minister Liz Truss at her party's latest conference, doubling down on her now-reversed economic reforms that prompted a tumultuous reaction from markets at the time they were announced.

Truss insisted that a decision to cut taxes was the 'right thing to do morally and economically'.

Geopolitical pressures continued to make their mark on the world economy, with media outlets reporting that Apple has been in talks with suppliers in India to shift production of AirPods and Beats out of China.

Meanwhile, UK-based airline Virgin Atlantic made headlines after announcing it is permanently closing its Hong Kong operations after 30 years'.

Commodities

Oil continued to rally following the OPEC+ decision increasing 1.9 per cent to US$93.48 a barrel. The New Zealand Dollar strengthened slightly against the Euro and the Australian dollar but failed to pick up meaningful momentum against the US dollar.

Australia

A strong performance out of the major Australian banks saw the ASX 200 extend gains from Tuesday, gaining another 1.7 per cent on the back of US employment data, which showed some evidence that the Fed's attempts to cool down the economy were working.

Energy stocks continued to track up on the back of strong oil prices, with Santos up 1.9 per cent after receiving an expedited hearing from the Australian Federal Court that may see it allowed to restart drilling at its Barossa gas field if its appeal is successful.

Link Group added 6.7 per cent after potential suitor Dye & Durham put forward a revised offer to acquire parts of the group.

Despite Link's board rebuffing two previous offers from Dye & Durham, it has announced that it will consider this third offer.

The Australian Securities and Investments Commission announced legal actions against both buy-now, pay later company Latitude and electronics retailer Harvey Norman, which both still ended in positive territory due to wider market optimism.

New Zealand

The New Zealand market recovered a further 0.8 per cent yesterday, after the Reserve Bank of New Zealand's (RBNZ) Official Cash Rate decision met market expectations for a 50 basis point hike.

Most sectors across the board ended in the green, with the largest index constituent Fisher & Paykel Healthcare recovering by 4.6 per cent.

The main news of the day was the RBNZ's decision to raise the official cash rate from 3.0 to 3.5 per cent.

The move was in line with market expectations, representing the fifth consecutive 50 basis point increase.

In further macroeconomic news, the New Zealand government revealed a much stronger than expected operating deficit at -$9.7 billion, and net debt at 17.2 per cent of GDP.

The shallower than expected deficit was partially credited to strong corporate earnings, which resulted in NZ companies paying tax of $4.1 billion.

Coming up today

New Zealand Rural Land Company will release its latest earnings result, while another batch of employment data is expected out of the US later in the day.

• For more information on the latest market moves, get in touch with Jarden.

All market pricing and announcements are sourced from Refinitiv, NZX and ASX.

The Jarden Brief is provided for general information purposes only. It reflects views and research available at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation.  We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission.  The Jarden Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm.  A financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/.
Full disclaimer available at: https://www.jarden.co.nz/wealth-sales-and-research-disclaimer