Note from the MD: Business confidence up despite inflation fear weighing on markets
It’s been a pretty unremarkable start on markets in April, as we head into the Easter break, with the benchmark ASX 200 dragging sideways on Monday before taking a tumble on Tuesday after interest rate fears put the screws to US markets the night before
It’s been a pretty unremarkable start on markets in April, as we head into the Easter break, with the benchmark ASX 200 dragging sideways on Monday before taking a tumble on Tuesday after interest rate fears put the screws to US markets the night before.
Looking at the data, some of those concerns might be justified too. Data from NAB showed businesses’ labour and purchase costs hit record highs in March and a 3.7% increase in retail prices suggests some of those increases are now being passed on to consumers.
The Reserve Bank of Australia is now widely tipped to raise the cash rate in June.
Even so, businesses are feeling more confident than they have in five months as the world starts to emerge from the Omicron wave and the supply chain challenges it posed.
The ANZ-Roy Morgan consumer confidence index also ticked up in March, and although it still remains below 100 (indicating negative sentiment) it is improving.
There was also a lift in household debit and credit card spending in the first week of April, which Commonwealth Bank analysts say is an indicator of ongoing strength.
Looking at how this all affects markets…
The XJO has traded sideways over the past week and has experienced a decrease in implied volatility to 12.76% (IV rank of 18). The market experienced most of its price action around the 7440 to 7465 support range, and attempted to break away on Monday but was rejected above 7500.
If buying pressure re-enters the market and it can push the XJO towards 7600, we may see a breakout move follow. However, if the market cannot push through this level, we may see another sell-off towards the 200-day MA.
Next week you won’t be receiving your usual The Insider Weekly bulletin – we’ve had a big start to the year here at Reach Markets and have decided to take this upcoming holiday period to take a well-earned rest.
Please note, during the Easter week, Friday 15th April to Monday 25th April, our office will only be operating with skeleton staff on our trading desk and settlement team.
We have an upcoming webinar with a company that has seen demand for its products trend upwards in the past quarter despite prevalent market challenges. Wellnex Life Limited (ASX: WNX) is a brand innovation and product distribution specialist with a distribution network that includes Australia’s leading retail and pharmacy chains and has grown its annual revenue more than 170% to $18.3 million since FY18 and is targeting $21 million in FY22.
Tomorrow at 11am (AEST), we will be joined by Wellnex Life CEO George Karafotias for a webcast, which will be an opportunity for potential investors to learn more about the company’s growth strategy, pipeline and future plans, along with a chance to ask questions. Click here to attend.
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