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Note from the MD: Markets jump as dovish RBA steadies hand on interest rates

February 2, 2022

Note from the MD: Markets jump as dovish RBA steadies hand on interest rates

Australian markets jumped yesterday after the Reserve Bank kept rates flat at 0.1% and reassured observers it will need to see improvement in wages growth before it looks to lift borrowing costs.

Australian markets jumped yesterday after the Reserve Bank kept rates flat at 0.1% and reassured observers it will need to see improvement in wages growth before it looks to lift borrowing costs.

Governor Philip Lowe noted, however, that inflation has picked up faster than the central bank expected, and officially called the end to the RBA’s bond-buying program for Tuesday, 10th February.

Australia has not seen the kind of inflationary pressures that other countries are currently wrestling with, which has forced skittish retail investors to look for safe-havens and pushed gold demand to its highest quarterly level since 2019.

In the US, the Federal Reserve has already signalled it is prepared to raise rates numerous times this year alone.

Meanwhile, Scott Morrison’s appearance at the National Press Club yesterday saw the launch of a new $1.6 billion program designed to help commercialise the innovative ideas coming from Australia’s research industry.

Details of the program have so far been obscured by the usual politicking and scandal-mongering that follows Morrison’s speeches, but what we do know is the money is earmarked for the resources, clean energy, medical products, recycling and defence industries.

And while yesterday didn’t see the flurry of activity we saw at the tail end of last week, it was still a fairly busy day on markets with almost 1,850,000 trades made through the ASX.

The XJO ASX 200 Index has gained 0.26% so far this week, slowly starting to recover from the volatile and bearish movements in the weeks prior, falling -2.62% and -2.95%. The index has been able to break back above the key support level of 7000 for now, but will be a level of interest for the short-term traders and the medium-term outlook for the market.

Investors gained confidence as the RBA held the cash rate at 0.1% for now, with the central bank stating they’ll keep these levels until actual inflation is sustainably between 2% and 3%. CPI inflation was recorded at 3.5%.

As we head into reporting season, fund managers are expecting to see higher costs of doing business – courtesy of more expensive freight, among other pressures – weigh on companies.

PPE manufacturer Ansell (ASX: ANN) reported supply disruption, operational challenges and price increases in freight and labour costs, resulting in lower earnings guidance; down 13.69% so far this week.

There are a handful of big names reporting this week but things will really start to gather pace next week, when Commonwealth Bank, Suncorp, AGL and several other heavyweight blue-chips release their results.

We have an IPO investment opportunity with Far East Gold, a gold exploration company with six advanced projects, including two with the potential to be world class, and multiple walk-up drill targets already identified.

This investment is closing on Friday and is an opportunity to become a shareholder with a company led by some of the biggest names in Australian mining, including Justin Werner of Nickel Mines (ASX: NIC). If you would like to know more about the opportunity, click here to read the prospectus or join us today at 2pm (AEDT) for a live investor briefing. Book here.

This update is being hosted by Reach Markets Pty Ltd (CAR of AFSL 333297) on behalf of Far East Gold.

Reach* does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed don not necessarily reflect Reach’s view.

Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.

The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.Reach* are assisting Far East Gold with the management of the Initial Public Offer (IPO) and may receive fees depending on whether the offer is taken up by investors.

Please note:

  • The securities on offer are issued by Far East Gold (ACN 639 887 219 )
  • The Prospectus is a replacement Prospectus dated 1 December 2021. It replaces a Prospectus lodged by Far East Gold with ASIC on 17 November 2021. The offer is available and can be obtained by clicking on the button above.
  • The offer of the securities is made in the Prospectus.
  • You need to consider the prospectus in deciding whether to acquire the securities.
  • To acquire the securities you will need to complete the application form that accompanies the prospectus

The shares offered by this prospectus should be considered highly speculative. An investment in the company is not risk free and potential investors need to consider the risk factors described in the prospectus and to consult their professional advisers before deciding whether to apply for shares. As per the prospectus ASIC, the ASX and their officers take no responsibility for the contents of the prospectus or the merit of the investment to which this prospectus relates.

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), R Corporate Pty Ltd (ABN 50643404871) (CAR No. 1290551) of Reach Financial Group Pty Ltd (ABN 17 090 611 680) who hold an Australian Financial Services Licence (AFSL) 333297.


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.

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