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Australian sharemarket opens in positive territory

Announcement posted by de2 Communications 20 Jun 2016

20 June 2016: SYDNEY  -- The Australian sharemarket has opened in positive territory this morning as Brexit worries subside and oil rallies. 

“The ASX200 fell over 2 per cent last week as all previous gains post the Reserve Bank of Australia (RBA) rate cut were overshadowed by tensions over the looming Brexit,” said Tim Nicol, client adviser at Atlantic Pacific Securities.

“It’s been a storm in a teacup as investors have overreacted to speculation around headline grabbing EU/UK decision,” he said. 

Nicol noted that probabilities of the UK leaving the EU have slid over the weekend to 36 per cent.

“We have seen this positivity directly correlate to a stronger open this morning,” he said. 

According to Nicol, “The timidness of global markets has been exposed recently and investors today have overlooked the risk-off approach, buying number of recently discounted stocks,”

Energy and financials sectors are leading the relief rally as oil prices rebounded over the weekend.  

“After recent weakness in oil, a weaker US dollar and short covering from traders has led to positivity in the commodity,” said Nicol. 

However, Nicol noted that, “The positive sentiment in oil may be short lived as the Brexit decision looms, if we do see the UK leave the EU a lot of pressure will be put on the price of oil, additionally an increasing number of rigs in the US will add to supply,”

“As voters and investors alike wrangle with the idea of a Brexit, it is likely we will see volatility in currency and equity markets over the coming days,” he said. 

“There still remains a lot of uncertainty around the decision and anxiety will persist until we have a definitive answer,” 

Nicol added, “It is likely we will see the market stagnate heading into the decision as investors are seeking consolidation from recent volatility,”

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