Welcome to Wednesday. Here are the five things I'm looking at today on the Australian sharemarket.
- The S&P/ ASX 200 (Index: ^AXJO) (ASX: XJO) has opened down 0.2%, not as bad as US markets though.
In the US, the Dow Jones tumbled 1.1% and the broader S&P 500 fell 0.9% while the tech-heavy NASDAQ also posted a 0.9% drop.Oil prices fell overnight, with Brent Crude Oil losing 2.2% to US$55.08 per barrel, and WTI Crude down 2.3% at US$47.55 per barrel. (WTI stands for West Texas Intermediate and is the benchmark oil price in the US while the Brent crude oil price is more widely used in Europe.)
The Australian dollar is lower against the US dollar and is currently buying 76.1 US cents.
- Iron ore has dropped 1.3% to US$51.35 per tonne. It's the lowest price since 2004-2005 according to some data sources. Citigroup says prices will fall below US$50 while ANZ analysts say it could breach that level in the second quarter. As Dominic Schnider, head of commodities and Asia-Pacific foreign exchange at UBS in Hong Kong told Fairfax media,
"Things do not look good…Somebody probably needs to leave the game".
The problem is, who? Could it be Gina Rinehart's Hancock Prospecting – which has yet to get its Roy Hill iron ore mine into production, or Andrew "Twiggy" Forrest's Fortescue Metals Group Limited (ASX: FMG)? While many of China's iron ore mines are much higher cost producers, a lot of them aren't closing down, as had been expected. As a result, supply is totally overwhelming demand, and it may not be long before we see China turn away iron ore shipments. It's happened before.
- The recently released competition review report could have major implications for pharmacists, retailers, supermarkets and Cabcharge Australia Limited (ASX: CAB). But like many other reviews conducted by government (think Henry Tax Review), it remains to be seen if any of the recommendations will be adopted. Quite simply there are too many powerful minority groups with a significant stake in the status quo being maintained, most of which the government doesn't want to upset. With no control over the Senate, the current government could well adopt a "no big new policies" policy until after the next election.
- Tweet of the Day
Stop Everything: You Can Play "Pac-Man" In Google Maps Right Now https://t.co/tTm9pBgnPE
Mike King (@TMFKinga) March 31, 2015Given it's April Fool's Day, perfect timing!
- Stock of the Day – brought to you by Tim McArthur – Ardent Leisure Group (ASX: AAD). Two high-profile fund managers are buying in – should you?
