Note from MD: Markets taking some comfort in the stability of monetary policy

US markets had a slight pullback overnight after minutes released from the latest Fed meeting revealed that the door was still not entirely closed to additional rate hikes if required. The Dow Jones was down 0.2%, S&P 500 down 0.1% and the Nasdaq was down 0.5% in afternoon trading.

US markets had a slight pullback overnight after minutes released from the latest Fed meeting revealed that the door was still not entirely closed to additional rate hikes if required. The Dow Jones was down 0.2%, S&P 500 down 0.1% and the Nasdaq was down 0.5% in afternoon trading.

The Bank of England and the European Central Bank echoed this sentiment in regards to the war against inflation not being quite over yet, and markets should be prepared for rates to stay higher for longer.

Despite this, the Bank of America sees the S&P 500 hitting a new record high next year, as American companies have demonstrated an ability to weather macroeconomic fluctuations and have adapted to higher rates. The bank sees the S&P 500 surging another 10% from its current position, all the way past 5,000 – on top of the 18% it has already rallied this year.

BofA’s analysts have floated the idea of a relatively ideal environment where the economy is not too hot or cold, and companies are able to moderately grow their earnings even during periods of slowing growth.

Domestically, Fortescue Metals Group (ASX: FMG) has pulled the trigger on the first three renewable energy projects that have previously been committed to, outlaying $1.1 billion in investments into the projects across the US and Australia. FMG shares hit a record $25.81 on Tuesday.

Despite US efforts to achieve supply chain independence, Australia isn’t quite closing the door on Chinese investment into rare earths. Trade Minister Don Farrel stated at the APEC Summit in San Francisco that there isn’t a need to change Australia’s foreign investment laws to restrict Chinese entities taking stakes in local projects. It should be noted of course that America’s Inflation Reduction Act has already delivered more than $20 billion in deals for Australian miners.

The gold price is continuing to hover around the US$2,000/per oz mark, which may work in favour of explorers looking to bring their deposits into production.

We are hosting a briefing with Joe Webb, Executive Director at  Felix Gold (ASX: FXG) this Thursday, 23rd of November at 12pm (AEDT). Joe will discuss Felix’s upcoming maiden resource, and the near-term development opportunities that are available to the company. Click here to book in or request a replay.

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