Note from the MD: Markets remain in flux as recession fears grow

Rate hikes have been the talk of the town here at home and in the US. While the RBA’s recent 50bp hike pushed the Aussie cash rate to its highest level since 2015, its US counterpart took it up a few notches to 75bp, bringing the US federal funds rate target to its highest since 2008.

Rate hikes have been the talk of the town here at home and in the US. While the RBA’s recent 50bp hike pushed the Aussie cash rate to its highest level since 2015, its US counterpart took it up a few notches to 75bp, bringing the US federal funds rate target to its highest since 2008.

If rate hikes were taking centre stage, volatility has certainly been operating behind the scenes. The S&P 500 VIX futures finished Tuesday up 15.3% from the previous Tuesday, resembling the volatility levels seen in June when the S&P 500 put in its 2022 low.

The UK and the US were reminded of a looming recession on Monday and the Aussie sharemarket responded consequently with the ASX 200 falling 1.51%.

Despite the brooding market signs, companies with a competent business model and a quality product can yet enjoy a competitive edge in almost every market.

Wherever the chips fall, global markets look to remain in flux for the foreseeable future and investors would be wise to keep a keen eye on the boards, recognise opportunities with strong long-term value and act before the next big boom.

On the markets front, the XJO has bounced off short-term support at 6433 to break a three-day losing streak where the market fell over 5%. The sell-off had left the market oversold and due for a short-term relief rally, with the majority of technical indicators still indicating strong selling post the relief rally.

The market has been trading below the 50-day and 200-day moving averages for the whole month of September. If the current oversold rally is to continue, we expect short-term resistance at 6729 and further short-term support at 6433.

Implied volatility is currently at 21.57% with an IV rank of 66. With a rally we could see volatility fall, which would indicate now to be a good time to sell volatility. However, if the rally is short lived and the market rolls back over, we could see a further increase in volatility as the market breaks through support levels to close lower.

In Australia’s fast-growing $10.7 billion (2021) Australian health and wellness industry, one company’s business model involves identifying consumer needs early and then mobilising its resources to address that market gap.

Listed on the ASX in 2021, Wellnex Life Limited (ASX: WNX) has launched and licensed more than five cutting-edge health and wellness brands, including Australia’s first soft gel liquid paracetamol in partnership with pharma and retail giants GlaxoSmithKline and Chemist Warehouse. Now, the company has identified the potential of medicinal cannabis and is rallying to become one of the first to launch an over-the-counter medicinal cannabis product in Australia.

CEO George Karafotias will be joining us tomorrow, Thursday 29th September at 12pm (AEST), when he will talk about the company’s ‘first and fast to market’ strategy and provide an update on the company’s current and future plans. I think this will be a fascinating conversation for potential investors. Click here to attend.

Reach Corporate provides Corporate Advisory Services to WNX and have been engaged by them to manage their investor communications.

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