Energy Markets: Commodities Exports Support Australian Stocks

Energy Markets:  Commodities Exports Support Australian Stocks

All of the focus on world stock markets over the last year has made it much more difficult to identify the true trends in commodities prices during the period.  For Australian export markets, this will be critical for traders looking to implement stock trading strategies given the strong weight allocated to these types of companies in the important Australian stock market benchmark, the ASX 100.

In Australian stock markets, many investors are heavily centered on the bullish side of the equation and many are now looking ahead to a price test of 5,000.  This could mean that bearish declines are few and far between and that CALL options in these types of instruments start to become more popular over the next few months.

The commodities space will be one of the best fundamental indicators to confirm whether or not further runs higher are justified.  Rising needs for global infrastructure programs will more than likely support the market prices for metals and oil, and this is something that could send BHP Billiton Petroleum (BHP) and AGL Energy Limited (AGL) to new highs.  These are two significant companies in the Australian stock market, and so the trends here will need to be taken into consideration for anyone looking to buy Australian stock options over the next few months.  

Australian Mining Companies

Other important areas will be seen in the metals space, as there are several important mining companies that could also send valuations in the ASX 100 higher in the coming months.  One stock that is often overlooked is Newcrest Mining Limited Limited (NCM) which has undergone some managerial and structural shifts that could support the earnings outlook within the company over the next year.  

The broader outlook in the metals space will depend heavily on the level of demand that is seen in China and India.  Australian is a major exporter of copper and other building materials, so healthy exports here will support the outlook for mining companies as a whole.

Currently, Newcrest Mining is pushing back toward resistance levels that could send prices much higher if broken.  Options traders should continue to watch price activity at 25.20 as this could be a good indicator for bullish breakout strategies over the next several months.  Other names to watch include Macquarie Group Limited (MQG), which has added some interesting assets to its portfolio over the last year.  

Once these investments start filtering through the rest of the company, we will likely see positively earnings surprises that could be used for CALL options positions on medium-term time frames.  In all, energy and commodities will continue to be a factor in the strength of the ASX 100 as a whole and investors will be watching for another test of major psychological resistance in the coming quarters.


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