Note from the MD: Market dips then bounces back amid huge week of financial news

Futures markets were pointing to a drop on the ASX this morning and market participants were happy to oblige with a dip on the open.

Futures markets were pointing to a drop on the ASX this morning and market participants were happy to oblige with a dip on the open.

The XJO pulled back shortly after the open to trade below the 7400 level. The market quickly recovered and resumed price action around 7400. The market has been trading sideways since 15th October this year, mostly within the 7340 to 7465 range. 

We are expecting a further sideways grind today as the market tries to decide which side of this pivot point it will trade on. 

Regardless of which way the market’s winds blow, investors might be feeling a little safer today after ASIC announced it is imposing tougher conditions on the ASX itself in a bid to prevent outages like the one we saw last November.

That outage was triggered by upgrades being made to the ASX’s software, and saw markets shuttered less than half an hour after opening on 16th November last year.

The regulator has now slapped three of the ASX’s licenses with additional license conditions, particular relating to the replacement program for the market operator’s CHESS clearing and settlements system.

In global news, US President Joe Biden reappointed Jerome Powell to continue leading the Federal Reserve – a widely expected but not guaranteed result.

Gold reacted violently to the news, dropping back to US$1800 an ounce – again, a widely expected outcome given the circumstances. 

Had Lael Brainard – Powell’s chief rival for the top job – beaten out her boss for the spot, gold was tipped to climb. 

While that scenario didn’t come to pass, Brainard still netted herself a promotion to Vice Chair of the Federal Reserve, something many see as a political play given Brainard’s well-established reputation as an advocate of climate change action.

Iron ore prices have rallied roughly 16% in the past few days as suspicions mount that Chinese authorities could step in to help its ailing property sector by providing greater support.

The embattled sector has been fighting tooth and nail to avoid a crash amid reports the billionaire founders of many of the struggling developers are turning out their own pockets in a bid to stave off catastrophe. 

By some estimates, they’ve already pumped close to $4 billion of their personal wealth into their businesses – hardly a vote of confidence in the state of the sector, but a positive sign that action is being taken to avoid the worst-case scenario.

And speaking of confidence, it seems consumers are feeling better about their financial situation. ANZ-Roy Morgan’s consumer confidence index lifted 1.3% this week.

Small and micro caps were down yesterday; the Small Ordinaries index (ASX: XSO) dropped 0.57% while the Emerging Companies index (ASX: XEC) gave up 0.58%.

Big gainers for the day included Champion Iron (ASX: CIA), up 8.03%; Australian Ethical (ASX: AEF), up 6.36%; and Genworth Mortgage Insurance (ASX: GMA), which climbed 5.96% after announcing a share buy-back.

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