The chair of the most powerful central bank in the world testified in front of the parliament of the richest nation on earth – and nothing happened. Janet Yellen’s straight bat, and a lack of economic data releases mean that local trading may be dominated by a spurious overnight rally in oil prices.
OPEC nations and fellow oil market travellers are gathered for the International Energy Forum in Algiers. From the sidelines, OPEC announced a production cut of 700,000 barrels per day, or about 2%. While sub-editors reached for the hyperbole generator, more cynical traders pointed out the complete lack of detail, including the potentially problematic question of which nations will curtail production. A 6% jump in crude prices makes a nice headline, but is within normal bounds for the currently highly volatile energy markets. Although this rally may quickly fade, energy stocks are likely to receive a boost at this morning’s opening.
Relief in banking circles could see the Australian share market outperform the futures market forecast of a 41 point gain today. The recent pressure on Deutsche Bank’s share price dissolved for a 2% plus gain overnight. The “if it gets into trouble, it will be in trouble” sell off appears to have collapsed on its own lack of logic. With financial stocks comprising around 47% of the main index, Australian shares may be set for the third day in a row of outperformance.