Note from the MD: ASX ends losing streak as geo-political uncertainty eases, but rate hikes loom

The ASX bounced back from a four day losing streak, after a short-lived armed rebellion in Russia exacerbated geo-poltical concerns and global market uncertainty.

The ASX bounced back from a four day losing streak, after a short-lived armed rebellion in Russia exacerbated geo-poltical concerns and global market uncertainty.

The US market, overnight, rebounded from its recent run of losses, bolstered by upbeat economic data, easing investor fears about an imminent recession.

Locally, the ASX’s fortunes continue to be tethered to inflation signals, as the Reserve Bank of Australia’s (RBA) next rate decision approaches. 

It comes after the RBA lifted interest rates for the 12th time in just over a year earlier this month. And while markets are ever hopeful, the central bank looks determined to continue lifting until it can wrestle down inflation, despite an increasing risk of recession.

While rate-induced cost of living pressures continue to be felt on the ground in retail, the global travel economy remains up in the clouds and relatively unscathed.

It was miners, along with banks, that helped the ASX break its losing streak yesterday, with the S&P/ASX 200 and All Ordinaries edging up, and five of 11 sectors ending higher.

Eyes now turn to next week’s RBA meeting. Westpac, NAB and ANZ are all forecasting the cash rate, currently at 4.1%, to peak at 4.6% – for most it’s not a question if rates will rise, but for how long.

Over the past seven days, the XJO experienced a notable decline, plummeting more than 3.8% below both the 50 and 200-day moving averages. This downward movement triggered an increase in volatility, creating a more uncertain market environment. Despite the recent bounce-back, the XJO remains below the moving averages, indicating ongoing bearish sentiment.

During this period, the XJO failed to close above the multi month resistance level at 7,374 reinforcing the trend. The 50-day and 200-day support levels were not enough to stop the fall lower. 

While the market has seen some recovery, with the ASX bouncing back, it is important to note that it has not yet surpassed the moving averages. This suggests that the bearish trend may still persist in the near term. Traders and investors will closely monitor whether the ASX can break above the moving averages and breach the resistance level, as it could potentially indicate a shift towards a more bullish market outlook.

The Metals & Mining Index continues its solid performance over the last 12 months, up around 10%. Doing even better is the gold market with the All Ordinaries Gold rising  23% over the same timeframe.

One investor and resource industry executive who has deep international experience across multiple commodity markets, including previous commercial roles with Rio Tinto overseeing a US$64 billion Cu-Mo project, is Joseph Webb, Managing Director of Mine Discovery Fund – a private investment vehicle focused on the discovery of base and precious metals.

Joseph will be joining us on Friday 7th July at 12pm (AEST) for The Insider: Meet the Fund Manager webcast, where he’ll provide insights into how he identifies investment opportunities within the resources industry. He’ll also discuss his favourite stocks, his outlook for the broader market and what it means for commodity investors. To join us for this session, click here.

Past performance is not a reliable indicator of future performance.

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