Overnight was the first trading day since the US launched attacks on Iran. The S&P 500 and Nasdaq rose 0.77% and 0.84% respectively. The positive movement is attributed to Iran’s modest retaliation, as they struck two US bases in the region.
- S&P 500 = +0.77%
- Nasdaq = +0.84%
- Aussie dollar up 0.1% to 64.55 US cents
- Iron up 0.5% to $94.00 US a tonne
Oil continues to be volatile
The oil price was the major mover as it declined by 7%. Initially brent crude had shot up over fears of a cut off in supply but these eased overnight.
With such volatility in the oil price, keep an eye on companies where oil consumption, and therefore its price, is key. Think airlines such as Qantas Airways Ltd (ASX: QAN) and logistics/transport businesses such as Mainfreight Limited (NZE: MFT). These businesses were down 1.85% and 0.17% respectively.
The market is taking it in its stride
Those new to investing may be a little surprised at the somewhat muted response of global markets compared to news headlines.
One small thing working in the favour of investors was the actions of the US taking place over the weekend, giving investors time to process the information and price the risks accordingly. This avoided a knee jerk reaction and processing those risks live on the fly.
Additionally, investors are forward looking, generally pricing in things six months or so down the track. Last week saw some market softness as participants priced the news and there’ll be small adjustments now to see if they got that right as things unfold.
But it pays to keep in mind those headlines you see are not the economy and there’ll often be a decoupling of the market and news headlines. Mainstream and financial media are not paid to make you a better investor. They’re paid on clicks.
I’d emphasise in particular avoiding articles framed around “how to play the oil volatility” for example. This will give you a false sense that these movements can be rationally predicted.
Times like these it pays to go back to the basics. Yesterday I wrote about how to help those around you who are panicking, the lessons in there aren’t just for new investors. They need to be re-enforced again and again for experienced ones too.
When uncertainty heightens we like to ensure we’re there for the Rask community. So make sure you come and join us in the Community, use the bottom right hand chat function or you can book a call directly with me. I have made sure I have plenty of time slots available.
