Oil prices are set to experience their first weekly decline since June due to a combination of concerns regarding China's economic weakness and the potential for stricter monetary policy in the US.
West Texas Intermediate crude is approaching $80 per barrel, marking its fourth drop in five sessions. This decline of over 3% during the week is attributed to disappointing economic data from China, impacting risk assets like oil. Despite signs of a tighter oil market, with US stockpiles at their lowest since January, these concerns have overshadowed positive indicators.
In the US, Federal Reserve policymakers have indicated the possibility of further interest rate hikes to control inflation. This stance has boosted US Treasury yields and strengthened the dollar. The dollar's fifth consecutive weekly gain, its longest winning streak in over a year, has diminished the attractiveness of commodities for international buyers.
Although oil prices have risen significantly from their June lows, primarily due to supply reductions by key OPEC+ members Saudi Arabia and Russia, there are divergent views on its future trajectory. Some, including the International Energy Agency, predict tighter market conditions and higher prices by year-end. However, Citigroup counters this by suggesting that oil could weaken due to disappointing consumption and an increase in supply.
At noon, the S&P/ASX 200 is 0.17 per cent higher at 7,158.00.
The SPI futures are pointing to a rise of 6 points.
Best and worst performers
The best-performing sector is REITs, up 2.52 per cent. The worst-performing sector is Communication Services, down 2.1 per cent.
The best-performing large cap is Amcor plc (ASX:AMC), trading 5.15 per cent higher at $14.90. It is followed by shares in Cochlear (ASX:COH) and ALS (ASX:ALQ).
The worst-performing large cap is ASX (ASX:ASX), trading 3.97 per cent lower at $58.10. It is followed by shares in ResMed (ASX:RMD) and Telstra Group (ASX:TLS).
Asian markets
Asia-Pacific markets fell on Friday as investors assessed Japan’s July inflation data and fresh blows to China’s real estate sector.
Japan’s core inflation rate fell to 3.1%, down from 3.3% in June. Headline inflation remained at 3.3%.
Meanwhile, embattled Chinese real estate giant Evergrande has filed for bankruptcy protection in a U.S bankruptcy court.
The company sought protection under Chapter 15 of the U.S. bankruptcy code, which shields non-U.S. companies that are undergoing restructuring from creditors.
Hong Kong’s Hang Seng index slid 0.35%, while the mainland CSI 300 index was trading close to the flatline.
Japan’s Nikkei 225 slipped 0.42% and the Topix also fell by 0.57% after the inflation reading was released.
Company news
Orexplore Technologies (ASX:OXT) has signed an agreement with BHP (ASX:BHP) for a field deployment at the Carrapateena mine in South Australia. In response, Orexplore’s Managing Director, Brett Giroud, commented: “this agreement further demonstrates increasing global demand for non-destructive, 3D information sourced rapidly from the field to inform decision processes, drive traditionally siloed collaboration around digital models, and create value within an operating mine.” Shares are trading 117 per cent higher at 10 cents.
Piedmont Lithium (Nasdaq: PLL; ASX: PLL) will increase its stake in Atlantic Lithium’s (AIM: ALL, ASX: A11) Ewoyaa Lithium Project as part of a staged investment agreement to earn a 50% equity interest in Atlantic Lithium’s Ghanaian lithium portfolio. Shares are trading 4.41 per cent higher at 71 cents.
Jaxsta (ASX:JXT) announces a landmark agreement with the Mechanical Licensing Collective, a nonprofit organisation established under the Music Modernization Act of 2018, created to issue blanket mechanical licences for qualified streaming services in the US, such as Spotify, and Amazon Music. In response, CEO of Jaxsta, Josh Simons said, “We believe this contract with the MLC symbolises a major step forward in our growth strategy and offers exciting opportunities for our shareholders.” Shares are trading 2.8 per cent higher at 5.5 cents.
Commodities and the dollar
Gold is trading at US$1922.50 an ounce.
Iron ore is 4.2 per cent higher at US$108.80 a tonne.
Iron ore futures are pointing to a 2.86 per cent rise.
One Australian dollar is buying 64.25 US cents.
