ASX 200 shares rise as oil tumbles again

ASX 200 share start week with a rally

Australia 200 shares got off to a strong start this week with a broad-based rally from financials, technology and healthcare companies.

The benchmark ASX 200 index finished Monday’s session at 5,319.80 points, up 73.90 points, or 1.4%, from Friday’s close of 5,245.90.

Westpac Banking Corporation (WBC) led the big four banks with a rise of 2.8% to $15.77. While ANZ Banking Group (ANZ), Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) all rose at least 1.7%.

Afterpay (APT) was the standout performer of the session. The buy now, pay later leader welcomed Hong Kong’s Tencent Holdings as a substantial shareholder. Investors responded by pushing the share price up $6.94, or 23.8%, to close the session at $36.10.

Oil prices fall as volatility returns to oil markets

In commodities, oil prices fell hard as investors were clearly spooked over that weekend that returning trade tensions between the US and China could hold back the economic recovery.

West Texas Intermediate (WTI) crude futures, America’s benchmark, tumbled to an intraday low of US$18.32 a barrel, down US$1.46, or 7.6%. This came off the back of a 17% surge last week.

Meanwhile, Brent crude futures, representing the international benchmark for oil, were down 90 cents, or 3.4%, at US$25.54, after falling as low as US$25.53. Brent rallied about 23% last week.

Pressure on US-China relations appeared to be the main driver of the negative sentiment in oil prices. Worryingly, from an economic perspective, as CNBC reported:

'A threat by U.S. President Donald Trump late last week to consider raising tariffs on China to retaliate for the spread of the coronavirus renewed fears that trade tensions could crimp an economic recovery, putting a lid on oil price gains.'

Meanwhile, America’s two largest energy companies, Exxon Mobil and Chevron both said they would cut output by 400,000 barrels per day this quarter.

According to Reuters, those market forces combined were expected to ease the global fuel glut and take some selling pressure out of WTI and Brent.

Elsewhere, Spot Gold prices were mostly unchanged on Monday. Spot gold was steady at US$1,698.56 per ounce in midday trading (AEST), having gained more than 1% on Friday. US gold futures gained 0.5% to US$1,708.80 per ounce.

The precious metal, seen as a safe haven for investors, could have gone higher, but the US dollar also firmed, according to Reuters, keeping gold pinned around the US$1,700-mark.

Meanwhile iron ore, a more closely guarded commodity that trades in less transparent markets, showed signs of stabilising around the US$80-mark, according to AusBiz’s David Scutt, an economist.

Reuters reports forecasts from BMO Capital that iron ore prices will drift to US$75 by Q4 thanks to the economic slowdown from Covid-19.

How to trade the ASX 200

What do you make of the current situation: do you see bullish or bearish opportunities? Whatever your opinion, you can trade indices, certain commodities and equities – both LONG or SHORT – with IG’s easy to use trading platform now.

For example, to buy (long) or sell (short) the ASX 200 index using CFDs, follow these easy steps:

• Create an IG Trading Account or log in to your existing account
• Enter ‘ASX 200’ in the search bar and select it
• Choose your position size
• Click on ‘buy’ or ‘sell’ in the deal ticket
• Confirm the trade