Iron ore prices tumbled to record low levels as weak Chinese steel industry data suggests that there may not be enough Chinese iron ore purchases resulting in Australia unable to sell all metal that is being produced. The longer term outlook is also weak as most of the Chinese steel manufacturing companies are still unprofitable despite prices having fallen to these low levels.
RBA cash rate hold STRATEGY gaining ground
Strong jobs data in Australia coupled with a lift in business confidence data suggests “hold” strategy to continue from RBA into 2016.
US rate rise and ECB QE easing in december likely
Stock markets bounced back with the news of the strength in the US economy and a December rate rise from the Fed. Thankfully and expectedly, the terror attacks in Paris did not have a major impact on the markets.ECB boss Draghi hinted at further quantitative easing at next month’s ECB meeting to provide further stimulus to the European economy.
japan in "technical recession"
Japan’s second consecutive quarter of a fall in GDP means that the world’s third largest economy is in “technical recession.”
MARKET UPDATE
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) Iron Ore index (USD per t) | This week 2.00 2.245 2.92 2.2623 0.7194 0.6711 88.40 4.5906 5256 2089 3620 44.66 1075.83 42.95 | Last week 2.00 2.24 2.95 2.27 0.7135 0.6611 87.48 4.5486 5051 2023 3581 43.61 1083.92 43.85 |
HOW LOW CAN IRON ORE PRICES GO?
According to Andy Xie, former Chief Economist at Morgan Stanley, who predicted a collapse in iron ore prices since 2012, said in a recent interview that as demand in China withers away, iron ore prices will continue to fall and will drop below USD 40 a ton before the end of 2015 and will trade in the USD 30s levels in 2016. Prices have fallen by over 35% alone in 2015. The future outlook for BHP, Rio and Fortescue continue to be under huge pressure.
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