Markets cautious ahead of wages data reaching 5-week lows

The market has pulled back from recent highs and today is trading at the 50 day moving average, a key support level that is currently being tested and represents an important inflection point. After the ASX 200 got close to breaking an all time high, this bullish price action is now being tested and we will be watching to see if a reversal occurs.

The market has pulled back from recent highs and today is trading at the 50 day moving average, a key support level that is currently being tested and represents an important inflection point. After the ASX 200 got close to breaking an all time high, this bullish price action is now being tested and we will be watching to see if a reversal occurs.

The RBA also released its board minutes on Tuesday which indicated the Central Bank was considering more rate hikes. This kept markets on edge with most major sectors in the red including Tech (-1.10%), Communication Services (-1.18%) and Consumer Staples (-1.03%).

The Aussie dollar fell against most major currencies, reflecting continuing uncertainty around inflation ahead of key Australian wage data, while U.S. markets had their worst day of 2023 overnight, with the Dow Jones down nearly 700 points, or 2.06%. This is in response to the potential U.S. interest rates will remain high after a raft of strong retail earnings yesterday and stronger-than-expected inflation last week. 

In terms of major economic data, the Bureau of Statistics will release the Wage Price Index for the December quarter this morning at 11:30am Sydney time. This could be a key indicator of the RBA’s reaction around interest rates in their next meeting in March.

The weaker the number is, the slower wages are growing, the less markets will expect another rate hike. The stronger the number is, the higher likelihood more rate hikes might still be on the cards.

Internationally, there will be updates in the manufacturing and services sector in the U.S., U.K., and EuroZone, which will give some indication of economic activity in those sectors. 

There was also softer inflation data out of Canada with the CPI rising 5.9% compared with 6.1% expected. Given Canada is a major economy, the markets may take this as a sign that inflation is starting to tail off, globally. 

With the key wages data this morning and major U.S. indexes in the red overnight, the Aussie market is expected to open lower and might be in for a volatile session today.

With inflation still an ever-present concern, both locally and abroad, the markets have continued to be cautious, with plenty of volatility around. While volatility presents lots of opportunities for day traders to take advantage of short-term moves, gold is often considered a safe-haven asset and viewed as a hedge against inflation. 

We have an upcoming webinar with an Aussie gold explorer that is making advances, including two new recent discoveries, in its Woyla project which the company has described as one of the best undrilled prospects in South-East Asia. Far East Gold (ASX: FEG) is led by an experienced board and management team with an extensive track record of mine development and includes Nickel Industries (ASX: NIC) Managing Director Justin Werner.

Tomorrow, Thursday at 12pm (AEDT), we will be joined by Chairman Paul Walker who will outline the company’s successes in Woyla, why Indonesia represents a strong investment, the company’s diversified pipeline of six highly-prospective projects and more. This will be a fascinating conversation for potential investors. Click here to attend.

 

Reach Corporate provides Corporate Advisory Services, including managing investor communications on behalf of Far East Gold Ltd and will receive fees for its services.

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