Note from the MD: Market cautious ahead of RBA’s annual address

While the ASX 200 finished marginally higher overnight (+0.6%), nearing five-month highs last week, the markets have been a little cautious this week.

While the ASX 200 finished marginally higher overnight (+0.6%), nearing five-month highs last week, the markets have been a little cautious this week.

7,200 seems to be a bit of a resistance level at the moment, especially with the lingering concern of more interest rate hikes by the RBA.

Overall, the ASX 200 has performed well, despite US markets trading mostly flat this past week. Ahead of RBA governor Philip Lowe’s speech overnight, the market seems poised for more hawkish news.

Overnight, in his annual dinner speech, RBA governor Lowe warned Australians to brace for higher inflation and lower economic growth, signalling the very real possibility of more interest rate rises.

Lowe also shot down the idea that wages growth would compensate for higher inflation, while stating that trade restrictions and global conflict are reversing the situation of stable prices we’ve had due to globalisation in the past three decades.

Meanwhile, as China reported its first COVID-19 death in six months, commodities prices have been hit, as the market is expecting Chinese authorities to tighten restrictions that would curb demand in a contracting economy.

Overall, the markets are still wary of global uncertainty based on a number of factors, from China to the war in Ukraine to hawkish comments out of the RBA and the Fed. High inflation and rising interest rates still appear to be a reality, in the short term, at least.

The GDX has stacked on over 14% of gains since the start of the month, and investors are watching closely to see if gold will show further signs of strength. While gold ETFs are continuing to experience minor outflows, a quick reversal could spark serious interest – and further market volatility could certainly bring this on.

Reach Markets has written a Gold Industry Report to provide greater insight into the outlook for gold, what factors will drive the price and what types of gold stocks some industry insiders are investing in. The report is designed to help investors better understand the current state of play and potential opportunities and is free for Reach subscribers. Request the report here.

Next week, in conclusion to our two-part gold summit, we will have the leaders in gold exploration and production to discuss the threats and opportunities within the gold market and what to be aware of when investing in the sector.

Click here to join the second and final session of The Insider: Investing in Gold Summit on Wednesday 30th November at 12pm (AEDT).

 

Past performance is not a reliable indicator of future performance.

Any advice contained in this communication is general only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement at www.reachmarkets.com.au and the relevant Product Disclosure Statement, Prospectus or offer documents to understand the features, risks and returns associated with the investment.

Reach* may have a material interest in and may earn fees or brokerage from any securities referred to in business or in which we seek to do business with. Please refer to the relevant offer documents for full details.

Trading options is not suitable for everyone. There is a risk that you can lose more than the value of a trade or its underlying assets. You should only act on the information we provide if you are confident that you fully understand what you are doing. Past returns do not always indicate future returns, and it is also possible to make significant losses. There is always a risk of loss when trading and investing.

*Reach refers to Reach Markets Pty Ltd (ABN 36 145 312 232) (CAR No: 431191), Reach Corporate Pty Ltd (ABN 76 638 960 540) (CAR No:1281636), Reach Trading Pty Ltd (ABN 16 615 714 442) (CAR No.1265855) of Reach Financial Group Pty Ltd (ABN 17 090 611 680) who hold an Australian Financial Services Licence (AFSL) 333297.

Sources:

This Week’s News

News

16 April 2024

Gold at record highs – so why aren’t gold stocks?

News

22 November 2023

Rare Earths Industry Review: Part 2

News

22 November 2023

Rare Earths Industry Review

General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG)

including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.