Note from the MD: Markets jittery after surprise rate hike

The ASX 200 (ASX: XJO) had been steadily trading lower since Monday, albeit mostly flat, until a surprise 0.25% RBA rate rise yesterday afternoon saw markets take a hit, closing 0.92% lower on Tuesday.

The ASX 200 (ASX: XJO) had been steadily trading lower since Monday, albeit mostly flat, until a surprise 0.25% RBA rate rise yesterday afternoon saw markets take a hit, closing 0.92% lower on Tuesday.

While inflation has passed its peak, according to the RBA, 7% is “still too high”, Treasurer Philip Lowe said in his statement. 

This translated to 10 out of 11 sectors in the XJO finishing in the red. Real Estate sector was particularly hit hard, as is often the case with interest rate hikes, falling 2.12% for the day.

Having said this, the gold price was supported overnight, rising 1.6%, while Iron Ore was also up, finishing 2.3% higher. This could be a combination of factors: a weaker US Dollar coupled with gold being viewed as a safe haven asset in times of economic uncertainty.

In terms of upcoming economic data, the US Federal Reserve will hand down its interest rate decision tomorrow morning (6pm GMT) Thursday 4th May, for which most economists predict a 25 basis point increase from 5% to 5.25%. There is also an update on inflation in the Eurozone, which will impact future Monetary Policy decisions in Europe. 

The XJO Bounced off strong resistance around 7364 and has moved lower especially in the last 2 sessions down over 1.8% in the last 7 days. Futures continue to move lower on surprise RBA rate rise and the recent failure of First Republic Bank in the US. The decline has seen volatility move higher from a low of 10.65% to 11.37%. 

As mentioned previously the XJO has found resistance around the 7,364 level, with the reversal we have seen the XJO fall through support at the 50-day MA (7,200). The next major multi month support level being the 6946 level. 

Locally, we have retail trade figures out which will determine the state of our discretionary spending as a result of high inflation.

We have an upcoming investor briefing with an Aussie company offering the only security and surveillance solution that can sense, think and act – without needing people, data cables or power cords. Spectur Limited (ASX: SP3) is used by institutions such as Optus, Surf Life Saving and the Department of Defence and was recently highlighted by Martin Pretty of Equitable Investors as a favourite stock.

Tomorrow, Thursday 4th May at 12pm (AEST), we will be joined by Managing Director Dr Gerard Dyson who will discuss Spectur’s Q3 FY23 results, including the acquisition of 3 Crowns Technologies and Spectur NZ, and how the company is focused on generating revenue and its growing sales pipeline of institutional contracts. Click here to book your spot or request the replay.

 

Past performance is not a reliable indicator of future performance.

Reach Corporate provides Corporate Advisory Services, including managing investor communications on behalf of Spectur Limited and will receive fees for its services.

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.

 

This Week’s News

News

21 June 2024

Australian Mining Pioneers MDF Global Forge Landmark Deal with Alaska’s Traditional Owners for a 5 Year Fully Funded Critical Minerals Accelerator Program

News

13 June 2024

Breaking News!!! Plutonic’s Kris Butera

News

31 May 2024

Top geo backed by leading resources funds believes he has discovered a potential new gold-copper district

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.