Trader’s Diary: Everything you need to get ready for the week ahead
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Last week’s headlines were dominated by interest rates hikes and concerns over a global recession.
Over the previous few days, three major central banks have hiked their cash rates – the US Fed by 75bp, the Bank of England by 25bp, and the Swiss National Bank (SNB) by 50bp.
The hike by SNB in particular caught the market by surprise, as it was the first time in 15 years the SNB had done so. The Swiss cash rate is now at minus 0.25% (from minus 0.75% previously).
The Bank of Japan meanwhile defied market calls to raise its ultralow cash rate, deciding instead to keep it at minus 0.1%. The BOJ decision triggered a selloff in USD/Yen, which has now appreciated from 115 at the beginning of the year, to 135 as of Friday.
There was more bad news on Friday as the eurozone inflation rose to a record high of 8.1% in May – four times more than the European Central Bank (ECB)’s 2% target. EU inflation excluding food and energy costs accelerated from 3.9% to 4.4%.
The ECB will meet on July 21, and the Governing Council has already announced it will raise its key interest rates by 25bps at the meeting.
Concerns over a potential global recession have sparked a selloff in global equity markets. The S&P 500 has already entered a bear market, and it fell by a further 4% last week.
Back home, the ASX 200 index lost almost 8% for the week and closing in on a bear market – defined as a 20% drop from the most recent high, which in the case of the ASX was in April.
Major investment banks are split on whether the world, especially the US, will fall into a recession.
Deutsche Bank says we will enter a recession, while Bank of America believes we will avoid it. Morgan Stanley is sitting on the fence, saying there’s a 50/50 chance.
Adam Dawes, a senior investment adviser based in Sydney, reckons there will “definitely be a recession in the US”.
“Since 1950, the US has had 15 rate cycle rises,” he said. “Out of those, 11 have ended in recession. They do not have a great track record,” Dawes told the Sunrise program.
RBA board minutes
Speech by RBA governor, Philip Lowe titled “Economic Outlook and Monetary Policy”
Skilled vacancies for May
Purchasing manager surveys for June
Labour force report for May
Business conditions and sentiments for June
RBA Governor on panel on “Central Banks and Inflation”
China loan prime rates
Eurozone construction output for April
US existing home sales for May
US national activity index for May
Eurozone current account for April
Testimony by US Federal Reserve chairman Jerome Powell
US purchasing manager surveys for June
US current account for the March quarter
ECB Economics bulletin
US consumer sentiment for June
US new home sales for May
China current account for the March quarter
According to the ASX and Stockhead’s own Emma Davies, these stocks will make their debut listing this week (subject to change without notice).
Listing: 22 June
IPO: $6m at $0.20
This explorer has two projects in the Lachlan Fold Belt (NSW) and one in Mount Isa (QLD).
Notably, the Lachlan Fold Belt is a major mining province with a long history of mineral production including gold (Au), copper (Cu), lead (Pb), zinc (Zn), silver (Ag) and tin (Sn).
And the Mount Isa region represents one of the largest accumulations of lead (Pb), zinc (Zn) and silver (Ag) in the world.
Listing: 22 June
IPO: $8m at $0.20
The company holds a 100% interest in the Splinter Rock Project and Grass Patch Project which are in the Goldfields-Esperance region of WA.
The projects are considered prospective for clay rare earth elements (REEs), and the aim is delineating and defining economic resources and reserves to develop into a future revenue generating operational mine.
Clay REE deposits are currently economically extracted in China, the dominant world producer.
Listing: 23 June
IPO: $100m at $0.70
The Firefinch (ASX:FFX) spinoff is focused on the Goulamina lithium project in Mali, which is expected to be one of the largest hard rock lithium mines in the world once it enters production in 2024.
The project is being developed in a 50/50 joint venture with Ganfeng, the world’s largest lithium chemical producer by production capacity, providing funding, offtake and operational support to de-risk development.
Goulamina is one of the few spodumene projects globally in the execute phase with FID approved by the boards of Firefinch and Ganfeng and early stage development underway.
Plus, the project is substantially funded to production with total funding commitments of up to US$194 million.