Sell-off may spread to Asia today

<p>Asian markets are set to open lower again today as contagion starts to take place across global markets. We are closely watching commodity markets, and […]</p>

Asian markets are set to open lower again today as contagion starts to take place across global markets. We are closely watching commodity markets, and in particularly the bulk commodities like iron ore and coal, to see what anecdotes are emerging from the Asian growth engine – China. There have been some unconfirmed reports that Australian miners have received requests from Asian customers to defer shipments but these have not yet been qualified. 

Optimists will find joy in the comments of IKEA Group’s CEO Mikael Ohlsson. He recently announced plans to triple the pace of store openings in China to capture faster growth and said “the demand is there”. Customers in the world’s most populous nation have “the dream, the wish, the need to furnish and the fit with IKEA is very good.” Sales in China are growing faster than at the company as a whole, Ohlsson said.

In Australia, exporters and Australian companies which generate their revenues in US$ could outperform the market today, given the decline of the A$/US$ overnight. Not all stocks are losers. 

Iron ore prices are coming under pressure. Bulks tend to hold up better but the most obvious losers in the short term are BHP, RIO and the emerging groups like FMG and AGO. Long term fundamentals are still intact.

Despite the market turmoil, Chevron’s $25bn Wheatstone LNG project in Western Australia has received government approval.

 

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