The Weekly: Oil awakens on Middle East tension, posts best weekly gain since early 2023
From YouTube
Markets are down this week, fearing that attacks between Israel and Hezbollah could intensify, with Joe Biden saying the US could potentially support strikes on Iranian oil facilities. The ASX200 fell 0.8% this week, pulling the market down from its new record. The US market is facing a similar fate. The concern is that the pullback could continue if tensions rise and if Friday’s US jobs report shows stronger-than-expected job growth. Then, there is concern that some of the expectations for rate cuts from the US could be trimmed.
But this week, it’s all about oil’s awakening. Oil prices are up 9% in five days, on track for their biggest weekly gain since early 2023 – now back at $73, with bets for oil to reach $100.
Plus, with Middle Eastern tensions rising, shares in Lockheed Martin $Lockheed Martin (LMT.US)$ – the US's largest defense contractor – hit new highs. So too did defense ETF $Ishares Trust U.S. Aerospace & Defense Etf (ITA.US)$
Plus, with Middle Eastern tensions rising, shares in Lockheed Martin $Lockheed Martin (LMT.US)$ – the US's largest defense contractor – hit new highs. So too did defense ETF $Ishares Trust U.S. Aerospace & Defense Etf (ITA.US)$
In other big news, we’re now seeing institutions put more money into China’s market than into US tech stocks, thanks to China’s stimulus. Hong Kong’s Hang Seng is up 33% this year. But US markets are still up 20%, while Australia’s market is up 7%. It has some catching up to do.
What did well this week on the ASX were oil stocks. Karoon $Karoon Energy Ltd (KAR.AU)$ led the pack, up 13%, with Australia's largest oil and gas company, Woodside $Woodside Energy Group Ltd (WDS.AU)$ , following suit. The ASX energy sector rose 7% this week and is up 12% for the month. This week’s best performer was Sigma $Sigma Healthcare Ltd (SIG.AU)$ , with shares rising 42% to a new record on its proposed merger with Chemist Warehouse.
Meanwhile, investors continued to buy into anything and everything that could benefit from Chinese stimulus and wealthier Chinese nationals coming to Australia. Real estate and building stocks like Fletcher Building, as well as tourism benefactors like Lifestyle Communities $Lifestyle Communities Ltd (LIC.AU)$ and Star Entertainment $The Star Entertainment Group Ltd (SGR.AU)$ saw buying interest.
Similar trends played out in the US market, but energy stocks dominated the top 10 leaderboard. Uranium company Vistra $Vistra Energy (VST.US)$ led the pack, up 12% and hitting a new record high. Its shares are now up 225% this year. Constellation Energy $Constellation Energy (CEG.US)$ , the company Microsoft $Microsoft (MSFT.US)$ and Amazon $Amazon (AMZN.US)$ are buying uranium from, rose 8%, while Warren Buffett-backed Occidental Petroleum $Occidental Petroleum (OXY.US)$ gained 7%.
Final thoughts and considerations
We saw moomoo clients increase their buying of Nvidia and China’s comeback stocks this week.
As for Nvidia $NVIDIA (NVDA.US)$ , clients increased their buying, and shares started to rebound after the CEO said demand for its new chips is "insane." Nvidia is now on track to approach a US$3 trillion market valuation. This week, JP Morgan and Bernstein upgraded Nvidia with a $155 price target.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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