Note from the MD: RBA pauses rate hikes as gold and silver break out

The RBA decided to leave the cash rate target at 3.6% yesterday, as Philip Lowe stated that the full effect of the past year’s substantial interest rate hikes is yet to be felt, and highlighted the importance of assessing the impact on the economy before taking further action. While February’s monthly inflation indicator (which was only started in September last year) showed 6.8%, moderating from the December quarters annual measure of 7.8%, the RBA has left the door open to future hikes if need be.

The RBA decided to leave the cash rate target at 3.6% yesterday, as Philip Lowe stated that the full effect of the past year’s substantial interest rate hikes is yet to be felt, and highlighted the importance of assessing the impact on the economy before taking further action. While February’s monthly inflation indicator (which was only started in September last year) showed 6.8%, moderating from the December quarters annual measure of 7.8%, the RBA has left the door open to future hikes if need be.

The ASX 200 is now around 5% away from it’s all time high. Money markets were forecasting a terminal rate of 4.4% as recently as February, but they are now factoring in a mere 22% chance of another rate hike in May. Wall Street ended slightly down, with the S&P 500 -0.58%, Nasdaq -0.52% and the Dow -0.59% as weak economic data rolled in. US job openings in February dropped to their lowest levels in nearly two years, which suggests a cooling labour market, while factory orders fell for a second straight month. As more earnings reports start to roll in, investors will be keeping a keen eye on where companies have been able to reign in spending without sacrificing growth.

After reaching a new high in Australian dollar terms just two weeks ago, gold has continued to show strength as it stacked on 2% of gains and managed to hold them. It is now trading around US$2,040/oz, with August futures nearing US$2,060/oz and October futures trading around US$2,070.

Silver has also had a serious run, and is up 25% over the past month after breaking US$25/oz. July futures are currently trading at US$25.35/oz.

The XJO has extended its recent rally over the last 15 days up over 4.5% and looks to be testing its 50-day moving average. Futures continue to be pushed higher after the aforementioned rate pause by the RBA. The continued rally has seen volatility stay lower with the XJO current IV Rank of 10. 

The XJO has found resistance around the 7,364 level, we would look to see the index close above the 50-day MA to continue the rally and test this resistance. If the market does reverse and head lower we expect to see support at the 200-day MA (7,022).

Consumer-driven businesses will be looking at tightening their marketing budgets considering that in 2021 roughly $200 billion was wasted on ineffective marketing briefs and strategies. With AI taking centre stage in 2023, use of the burgeoning tech is becoming a viable option after it was recently revealed that 52% of marketing executives are concerned about the economy in the coming year.

We have an investment open with a growing AI-led martech business. It’s via exposure to a wholesale convertible note with a 2-year investment term, a 11% cash coupon with the option to convert or redeem. The business has a solution designed to streamline how brands can reach their consumers with targeted content and measure the results – at a fraction of the time and cost. The business services some of the largest multinational corporations on the planet, including Amazon, Disney, Lego and Nestle. Click here to register your interest.

 

Past performance is not a reliable indicator of future performance.

Reach Markets have been engaged by Tribe to manage this offer and may 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

22 November 2023

Rare Earths Industry Review: Part 2

News

22 November 2023

Rare Earths Industry Review

News

22 November 2023

World first left ventricle heart failure device gears up for approval

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.