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 up 0.3%.In the US, the Dow Jones closed flat while the broader S&P 500 fell 0.2% and the tech-heavy NASDAQ posted a 0.1% fall.Oil prices were up again, with Brent Crude Oil rising 0.7% to US$578.54 per barrel, and WTI Crude added 2.1% to hit US$53.25 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 76.3 US cents.
- Iron ore prices rose 2% overnight, to US$48.06 per tonne, but it's probably too late for Atlas Iron Limited (ASX: AGO). Atlas voluntarily suspended its shares, while it conducts a review of its business, but it's hard to see the company coming back from here. The big miners, BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) will survive and thrive even at these low prices, given their ultra-low production costs, but it's going to tough for junior miners with relatively high production costs.
Is it time to buy either BHP or RIO? Find out here.
- Australian equities are overvalued, says UK-based Invesco's Georgina Taylor.
"Equities have done ok, but it does look very expensive versus broader global equities," she said.Ms Taylor also said that yields on bonds and cash were likely to remain low, as global growth and inflation remain stuck in low gear, according to the Australian Financial Review (AFR). If other asset classes' returns are low, the relatively high returns from stocks should continue to see investors pour money into the stockmarket – until they have an alternative that is.The problem of course is that a bubble could form – if there's not one already. And Ms Taylor says that investors are viewing dividend-paying stocks as risk-free, when even a small interest rate hike in the US could see money reverse course. That's one of the dangers of buying shares in expensive stocks. A sudden pullback can leave them looking less attractive and snowball from there.
- Tweet of the Day
The probability is that the real house price boom hasn't even started, says @AdamCarrEcon https://t.co/9SIAlEQmky pic.twitter.com/yC3pLgnbke
Business Review (@aus_business) April 7, 2015Now, there's a different view!
- Stock of the Day – brought to you by Sean O'Neill – Coca-Cola Amatil Ltd (ASX: CCL). Is this the year the fizzy drink maker gets its mojo back? Find out here.
