• Inflation vs rate hikes vs traders = turbulence
  • Markets recalibrate for rising rates, war continues
  • Two diggers expected to make their ASX debut this week

Major economic headlines last week

It was a turbulent week for markets after the US Federal Reserve raised interest rates by 0.5% at its May board meeting.

So US Team Fed really wanted to make it clear to all involved last week it was going to avoid what XM’s Pete McGuire calls a bunch of ‘shock-and-awe rate increases’.

When the pushing came to shoving on Wednesday, Chairman Powell was too busy talking about avoiding a recession rather than smashing inflation; this kind of meant the message came out as a sigh rather than a scream. Gone was the speculation of a swag of 75 basis point rate increases and Powell even opened the door for a slowdown in the pace of tightening anon.

That inspired buying hard, followed by a day to think about it, followed by a significant crash. Investor logic working thusly: By not acting with sufficient force now, the Fed will need to do even more later to tame inflation.

At home, the turbulence hit the ASX200, down 3% for the week, the small caps index (XEC) losing 2.6%.

Pete says the market-implied probability for a 75 basis point rate increase in June, which Powell effectively ruled out, currently stands around 80%.

“Meanwhile, Treasury yields have stormed to new highs, particularly at the longer end of the curve. That’s the bond market telling the Fed that it is committing a policy error.”

US March quarter earnings are just about a done thing too, a little over 10% of S&P500 stocks yet to report.

It was another fine harvest, with almost every nine out of 10 companies beating expectations. Annual earnings growth is running at 10.6% over the year. Solid earnings outcome explains the ability of companies to pass through higher prices to consumers.

Looking ahead there’s another round of US inflation data, a fair few analysts saying the CPI rate – awful as it’s been – may well have peaked.

The photo above is of a young man posing while sitting on a head from the The ‘Friendship of Peoples’ monument during its demolition on April 26, 2022 in Kyiv. Late last month Kyiv’s Mayor Vitali Klitschko announced in a social media post that the eight-metre high statue of men holding a star-shaped emblem that says “Friendship of Peoples” and “USSR” would be removed from the city, and the metal arch overhead would be renamed.


Economic calendar for this week


April NAB business survey
Q1 real retail sales

May WBC–MI Consumer Sentiment

May MI inflation expectations
April overseas arrivals, preliminary



Nikkei Japan PMI Services
China April trade balance
Chinas April new loans
China April M2 money supply
EU May Sentix investor confidence
US March wholesale inventories

NZ April retail card spending
Japan March household spending
EU May ZEW survey of expectations
US April NFIB small business optimism measure

China April PPI
China April CPI
US April CPI

NZ April REINZ house prices
NZ April food price index
Q2 RBNZ inflation expectations
Japan Mar current account balance
UK March trade balance
US April PPI
US Initial jobless claims

NZ April manufacturing PMI
EU March industrial production
US April import price index
US May University of Michigan sentiment read

Sources: Commsec, Westpac


ASX IPO calendar for this week

These are the companies the ASX thinks might be listing:

Southern Cross Gold (ASX:SXG)

Listing: 11 May

IPO: $10m at $0.20

This gold explorer is focused on revitalising the Victorian goldfields, which host Fosterville and Costerfield, two of the highest-grade underground deposits in the world.

The company is a spin-out from Toronto Stock Exchange listed Mawson Gold – which is now a Nordic-focused gold exploration company that holds the Rajapalot gold-cobalt project in northern Finland.

SXG operates the Sunday Creek, Redcastle and Whroo projects in Victoria, along with the Mt Isa polymetalic project in Queensland.

Bellavista Resources (ASX:BVR)

Listing: 12 May

IPO: $6.5m at $0.20

The explorer is targeting large, high-grade base metal and battery mineral deposits in Western Australia.

The company has a large and highly prospective tenement package that covers approximately 100km of strike of the northern margin of the highly prospective Edmund Basin.

The projects include Brumby Deposit, Vernon Base Metals, Vernon Nickel-PGE and Gorge Creek which are highly prospective for zinc, copper, silver, PGE and uranium deposits.