News

Note from the MD: US markets reverse after Federal Reserve reservations dissipate

March 16, 2022

Note from the MD: US markets reverse after Federal Reserve reservations dissipate

After wiping out some of Monday’s gains yesterday, the ASX 200 looks set to climb today after a positive session in US markets overnight.

After wiping out some of Monday’s gains yesterday, the ASX 200 looks set to climb today after a positive session in US markets overnight.

Fears of a Federal Reserve rate hike – which is still expected to be announced in the next 24 hours – initially hurt Wall Street, especially the Nasdaq, on Monday night.

However, last night we saw much of that reverse, helped along in part by dips in the oil price offering a reprieve from the higher prices we saw in the immediate wake of Russia’s invasion of Ukraine.

All eyes are now on the ASX, which is expected to follow the US’s lead in trading today.

The market has traded sideways over the past week, in line with price action since 25th  February, but with some higher volatility in its intraday movements. The market is currently trading below the 50-day MA, which may hinder any breakout move from the current sideways trading range.

Overall, it looks like the 6980-7000 support band is a major support level going forward. Commodities have pulled back with gold front month futures pulling back from $2000/oz to $1930/oz and iron ore front month futures falling from $151.10/t to $145.40/t.

New ABS figures show the spread of the Omicron variant at the start of the year weighed on business turnover, which in January dropped in 10 of the 13 industry sectors tracked by the bureau – though interestingly, almost every sector recorded higher turnover for January 2022 than the same month in the previous year.

The Reserve Bank noted as well that labour conditions are tighter now than they have been since 2008, with unemployment at its lowest level in 14 years – though wages growth is only sitting at its pre-pandemic levels.

And speaking of the RBA, how could we forget the shock departure of deputy governor Guy Debelle, which was announced this week too?

Many expected to see Debelle eventually take the reins from Philip Lowe once the long-serving governor leaves his post.

Elsewhere in the world, the news cycle is really heating up. Russia looks likely to default on its foreign debts in a process that could trigger a recession, China is bleeding capital as investors baulk at rising COVID case numbers and the country’s confusing stance on Russia, and US Treasury yields have spiked.

Never a dull moment on markets, I suppose, but it’s important as we head into this confusing and noisy period to maintain a cool head and really think about your portfolios.

Far East Gold’s IPO is closing today – advanced gold and copper mining and exploration company that has significant projects across South-East Asia with ready-to-be-drilled targets and ‘bonanza grade’ gold prospects. The company is targeting an ASX listing date of 24th March 2022. Click here to view the prospectus and to submit the application form; ensure you carefully consider the information within before making a decision to invest.

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), Reach 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.

Live Investor Briefing

Learn how regenerative farming is transforming the agriculture industry

Leave a comment