Note from the MD: Markets and commodities press ahead while power retreats

The ASX 200 is now less than 2% away from it’s all time high, after stacking on around 7% January gains in a strong start to the year. Traders will be eagerly watching fourth quarter CPI data that gets released today at 11:30am (AEDT), with the RBA forecasting 6.5%. The VIX continues to hover around 19-20 while all US index’s ended the day only marginally different Monday.

The ASX 200 is now less than 2% away from it’s all time high, after stacking on around 7% January gains in a strong start to the year. Traders will be eagerly watching fourth quarter CPI data that gets released today at 11:30am (AEDT), with the RBA forecasting 6.5%. The VIX continues to hover around 19-20 while all US index’s ended the day only marginally different Monday.

There was some unusual volatility in the US at market open on Tuesday, with at least 40 companies entering into trading halts after wild stock plunges that are being blamed on a computer glitch.

Copper has had a surprisingly bullish start to the year, comfortably trading around US$4.25/lb for the past few days. This is now over 35% up from its 2022 interest rate fear induced low

Lithium stocks had a rally yesterday on the back of UBS upgrading their price targets for the commodity, which in turn increased the valuations of all the companies they cover in the sector. It wasn’t long ago that a bearish Goldman Sachs report on lithium crushed the same stocks that ran yesterday, but as always, the market remains nimble.

Wholesale power prices have rapidly sunk as renewable energy sources like wind and solar have had a good few months, with December sitting not far above $50/MWh – a far cry from the 2Q CY22 prices of over $250/MWh. The prices were also heavily impacted by the federal government’s decision to cap the gas price, which almost immediately ignited a steep drop in wholesale electricity prices.

The XJO continues to push higher since the start of 2023, having bounced off the support at 6946 and continued through resistance at 7354. Implied volatility has fallen 19.18% from peak of 14.6% to 11.8%. 

With an UV rank of 4, now would be a good time for traders to take advantage of the cheap options and buy protection if they think the market will reverse due to recession worries. Or alternatively, buy calls to capitalise on the continued momentum.

As we begin to gather momentum in the new year, Reach Markets is kicking off 2023’s The Insider series with our first Meet the Manager session featuring Cyan Investment Management Director and Portfolio Manager, Graeme Carson.

Graeme will be joining us on Friday, 3rd February at 12pm (AEDT) where he will share three favourite stocks that were chosen based on his ‘value investment’ criteria, along with unique market insights and Cyan’s investment strategy for 2023. Click here to book your spot or request the replay.

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