Welcome to Friday. Here are the five things I'm looking at today on the Australian sharemarket.
- The S&P/ ASX 200 Index (Index: ^AXJO) (ASX: XJO) has opened down 0.2%, as Wall Street posted flat results overnight, while the NASDAQ managed to post a 0.2% gain.That was in stark contrast to European markets, where the UK's FTSE 100 dropped 1.7%, Germany's DAX was down 2%, and Bloomberg European 500 Index lost 2.4%.
It seems investors are concerned that the European Central Bank's (ECB) bond buying program won't be enough to boost inflation and revive a flagging economy. ECB president Mario "Whatever it takes" Draghi said the bank could buy up to US$1.3 trillion in assets over the next two years.
- Locally, it seems analysts and the market have again taken a liking to banks. All four major banks were either flat or up in early trading. Bell Potter's TS Lim has joined two other analysts with Buy ratings on Australia's largest bank, Commonwealth Bank of Australia (ASX: CBA).Those are brave calls, with Lim suggesting CBA stands out because it has better risk fundamentals, and its fully franked dividend yield. I'm not sure I'd call a dominant exposure to Australia's hot property market, 'better risk', and I'm not sure whether Mr Lim is factoring in any of the risks we have recently highlighted.
- BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have lost 7.7% and 5.8% respectively off their share prices in the past month, thanks mainly to falling iron ore and other commodity prices.
Are there more falls to come, or is this a chance to pick up the big miners on the cheap? Colleague Ryan Newman shared his thoughts on BHP yesterday. - Tweet of the Day.
Goldman Sachs has bad news for met #coal producers: prices to remain lower for longer. No relief in sight #ausbiz
Rudi Filapek-Vandyck (@Filapek) October 3, 2014Cyclical or structural issues for coal miners? Seems to me lower coal prices for longer and the prospect of going even lower mean it could be structural. Look out below!
- Stock of the Day – brought to you by Regan Pearson – Santos Ltd (ASX: STO). Oil and gas producer, Santos has seen its share price fall 8% over the past month, along with oil prices. But as Regan notes in his article, the company is on track to DOUBLE its operating cash flows by 2016, compared to 2013. You can read more here.
