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Note from the MD: Investors watch on as global leaders discuss plan to go green and clean

November 3, 2021

Note from the MD: Investors watch on as global leaders discuss plan to go green and clean

It’s been a big week for clean energy as the world’s most powerful politicians came together in Glasgow for the COP26 meetings, where Prime Minister Scott Morrison promised to invest an additional $500 million on climate projects through the Indo-Pacific region.

It’s been a big week for clean energy as the world’s most powerful politicians came together in Glasgow for the COP26 meetings, where Prime Minister Scott Morrison promised to invest an additional $500 million on climate projects through the Indo-Pacific region.

Despite the size of this investment, Australia has been accused of dragging its heels on the issue, with Fiji describing our latest plan as ‘a start’ but with more work needed.

Australia was also among a handful of holdouts to a new plan introduced by US President Joe Biden to curb methane emissions, with Energy Minister Angus Taylor saying the current plan is to reduce emissions across the whole economy rather than set specific sector targets.

At any rate, the meetings will have lasting impacts for investors as markets increasingly seek to put their capital into sustainable businesses. 

The XJO opened on the 7340 level then traded towards resistance at 7400, breaking through the 50 day MA at 7382 on the way. Over the coming days we will be watching whether the market can pick a direction and run with it. If the market can hold price action above the 50 day MA for the remainder of this week, we may see some positive momentum into next week.

During Tuesday’s trade, the benchmark ASX 200 (ASX: XJO) was down 46.5 points (0.6%) yesterday after the Reserve Bank kept rates on hold at 0.1% but signalled changes to its debt-buying programs.

The Australian dollar dropped following the news but bonds saw little movement – likely because they’d already jumped higher last week.

The energy, mining and finance industries bore the brunt of yesterday’s losses but only 61 of the 200 companies in the index managed to end yesterday’s session in the green regardless.

The Small Ordinaries index (ASX: XSO) similarly gave up ground, dropping back 0.68% during the day, with food delivery service Marley Spoon alone dropping back 11.9%.

The company’s growth numbers have been hurt by the reopening of restaurants, with consumers choosing to dine out instead of receiving meal kits delivered to their homes.

Further down the market capitalisation spectrum, however, things were looking up – the Emerging Companies index (ASX: XEC) clicked up 0.19% with one-year returns hovering just above 60%.

Tomorrow, the ABS will be publishing its latest retail trade figures – the previous release (September) showed an uptick in activity of 1.3% but turnover varied drastically between states depending on how locked down they were.

In Queensland, where no restrictions were in place during the month, turnover rose to its highest ever level. In Victoria and the ACT – both of which were locked down for the entirety of September – turnover fell.

October’s figures will no doubt paint an interesting picture of Australians’ shopping habits as restrictions begin to come off across the country just in time for Christmas.

One investor who’s keeping a keen eye on the market reactions to green energy is Samuel Berridge, a fund manager and resources analyst at Perennial Partners – one of Australia’s most diverse small cap investment firms.

Samuel will be joining us this Friday, 5th November, at 12pm (AEDT) for The Insider: Meet the Fund Manager webcast, where he’ll provide insights into how the shift to green energy will affect oil and gas. He’ll also discuss some of the key stocks in his portfolio that he thinks could be well placed to capitalise on the green energy trends. To join us for this session, click here.


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