Petrol prices drift higher; Asian shares slide

Weekly Petrol Prices; Sharemarket trends

• 

  Asian shares take a slide.

  Petrol prices rise: According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 2.8 cents per litre to 147.6 cents a litre in the week to September 21.

• Asian shares slide: Asian sharemarkets fell by over 1 per cent on Monday.

What does it all mean?

• Perhaps there needs to be a degree course in petrol price analysis. Across the major capital cities, petrol prices are moving in different directions while in Darwin, Hobart and regional areas, petrol prices are stubbornly stable.
• Overall though, motorists in capital cities are still enjoying historically-low prices. The good news is that the world is well supplied with oil. The bad news is that OPEC oil producers are seeking to cut back production. While for local motorists, the weaker Aussie dollar is serving to push prices modestly higher.
• Sharemarkets across Asia were sharply lower on Monday with analysts scratching for reasons behind the sell-off. Fears that the US Federal Reserve could tighten monetary policy earlier than previously expected have been weighing on markets for the past few weeks. The term ‘Taper Tantrum’ is quite apt. Higher interest rates would attract investment funds to the US, while higher rates act to restrain a “growth region” like Asia.
• Also not helping proceedings have been comments from China’s Finance Minister. In Cairns for the G20 finance ministers meeting, Lou Jiwei said on Sunday “China will not make major policy adjustments due to a change in any one economic indicator”. He was referring to the weak industrial production reading for August, seemingly ruling out major stimulus to counter-act the slowdown. At time of writing, Australian shares were down 1.3 per cent with Hong Kong down 1.3%, Japan down 0.8 per cent, Korea down 0.9 per cent and China’s Shanghai composite down 1.5 per cent.

What do the figures show?

Petrol prices

• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 2.8 cents a litre to 147.6 c/l in the week to September 21. The increase in prices reflected the lift from the low point in the discounting cycles in Sydney and Melbourne. The metropolitan price rose by 4.0 cents to 145.8 c/l, while the regional average price rose by 0.3 cents to 151.3 c/l.
• The national average Australian price of diesel petrol was unchanged at 154.9c/l in the week to September 21. The metropolitan price fell by 0.3 cents to 152.6 c/l, while the regional average price fell by 0.5 cents to 156.1 c/l.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 8.1 cents to 145.9 c/l), Melbourne (up by 7.1 cents to 142.5 c/l), Brisbane (up by 0.8 cents to 150.3 c/l), Adelaide (down by 4.3 cents to 140.1 c/l), Perth (up by 0.6 cents to 144.6 c/l), Darwin (unchanged at 173.0 c/l), Canberra (down 0.1 c/l to 154.7 c/l) and Hobart (down 0.1 c/l to 158.3 c/l).
• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 137.7 c/l, up 1.7 cents over the week and up by 3.2 cents a litre up on the 15-month low of 134.5 cents set on August 25.
• Last week the key Singapore gasoline price fell by US$2.85 to US$108.85 a barrel – just off the lowest levels in 17 months. In Australian dollar terms the Singapore gasoline price fell by $1.89 a barrel or 1.5 per cent last week to $121.40 a barrel or 76.35 cents a litre.
• Figures from MotorMouth show that petrol prices have been mixed across capital cities. In Sydney, prices hit lows on September 5 and have drifted higher, hitting a two-month high on September 20. In Melbourne, prices troughed on September 12 and now stand at one-month highs. In Brisbane prices peaked on September 13 and have since fallen. And in Adelaide prices peaked on September 14 and have since fallen.
• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
• Consumers are finding conditions quite fluky at present. Petrol discounting cycles have changed in southern and eastern states; the Aussie dollar has softened; and wage growth is modest. But, on the other hand, home buyers are active in refinancing loans to unleash spending power; companies are paying out bigger dividends; and disposable incomes of households are up 4.7 per cent on a year ago – the fastest growth in two years.
• Overall, though, there is still no pressing reason for the Reserve Bank to change interest rate settings.
• The Australian sharemarket has become dearer over July-September, so the current correction is healthy in a longer-term sense. The forward price-earnings ratio has been above the decade average for the past six months. And at levels near 15.54, the price earnings ratio still has further to fall to reach the decade average of 14.86.
• The “normalisation” of US interest rates was always going to be a little bumpy, and some of those speed humps are currently been navigated. But the strength of the recent profit-reporting season has left Australian companies in good shape to ride any volatility, especially the high cash levels being maintained by Corporate Australia.
• Between February 1994 and February 1995, the US Federal Reserve lifted the funds rate from 3 per cent to 6 per cent. Between June 1994 and June 1995, the Japanese sharemarket fell 33 per cent. Between May 1994 and February 1995 the Australian All Ordinaries lost 15 per cent. Between February 1994 and February 1995, the Hang Seng fell by 43 per cent. Janet Yellen assures that the path of rates hasn’t been decided but investors aren’t convinced.

Why is the data important?

• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

What are the implications?

• Consumers are finding conditions quite fluky at present. Petrol discounting cycles have changed in southern and eastern states; the Aussie dollar has softened; and wage growth is modest. But, on the other hand, home buyers are active in refinancing loans to unleash spending power; companies are paying out bigger dividends; and disposable incomes of households are up 4.7 per cent on a year ago – the fastest growth in two years.
• Overall, though, there is still no pressing reason for the Reserve Bank to change interest rate settings.
• The Australian sharemarket has become dearer over July-September, so the current correction is healthy in a longer-term sense. The forward price-earnings ratio has been above the decade average for the past six months. And at levels near 15.54, the price earnings ratio still has further to fall to reach the decade average of 14.86.
• The “normalisation” of US interest rates was always going to be a little bumpy, and some of those speed humps are currently been navigated. But the strength of the recent profit-reporting season has left Australian companies in good shape to ride any volatility, especially the high cash levels being maintained by Corporate Australia.
• Between February 1994 and February 1995, the US Federal Reserve lifted the funds rate from 3 per cent to 6 per cent. Between June 1994 and June 1995, the Japanese sharemarket fell 33 per cent. Between May 1994 and February 1995 the Australian All Ordinaries lost 15 per cent. Between February 1994 and February 1995, the Hang Seng fell by 43 per cent. Janet Yellen assures that the path of rates hasn’t been decided but investors aren’t convinced.