Welcome to Thursday. Here are the five things I'm looking at today on the Australian sharemarket.
- The S&P/ ASX 200(Index: ^AXJO) (ASX: XJO) has dropped 1.1% at the open after Wall Street fell overnight.In the US, the Dow Jones crashed down 1.6%, the broader S&P 500 dropped 1.5% while the tech-heavy NASDAQ posted a 1.8% fall.Oil prices continued their topsy-turvy ride, with Brent Crude Oil gaining 2.5% to US$56.48 per barrel, and WTI Crude fell 0.8% to US$48.83 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 up slightly against the US dollar and is currently buying 78.4 US cents.
- Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) face a classic "prisoner's dilemma" according to Fortescue Metals Group Limited (ASX: FMG) chairman and largest shareholder, Andrew 'Twiggy' Forrest.Basically, the prisoner's dilemma comment means that BHP & Rio could back off iron ore production and see the commodity price rise, benefitting all iron ore miners. But if only one company backs off, the other miners benefit. Because neither miner trusts the others to back off production, they all continue to produce at record levels, further pushing the price down and hurting all miners.On that note, iron ore dipped overnight to US$55.81 per tonne.
- Investment bank UBS says it sees worrying signs for Australia's big four banks, Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac Banking Corp (ASX: WBC).Analysts say the big four banks are at or near record highs, with trading multiples only exceeded during the 1991-1992 recession and briefly during the Global Financial Crisis.The bank also says exposure to Australia's hot housing sector, with 61% of all credit being for housing loans. UBS says it sees housing in Australia as 'very expensive'. Despite the 'worrying signs', UBS still thinks investors should buy NAB and Westpac. Yet another reason why investors need to ignore broker reports as I mentioned here.
- Tweet of the Day
Jeremy Clarkson confirmed to take vacant spot at One Direction #TopGear #ByeZayn pic.twitter.com/OWkygT5xYu
The Shovel (@The_Shovel_) March 25, 2015Just something to brighten your day, as markets slide.
- Stock of the Day– brought to you by Regan Pearson – Money3 Corporation Limited (ASX: MNY). Don't know anything about this small financial services company? See what Regan thinks here.
