Traders’ Diary: Everything you need to get ready for the week ahead
Stronger than expected US job numbers gave investors concern that the Fed could keep hiking rates.
US employers added 517,000 jobs in January, compared to 260,000 in December.
This is despite all the job cuts in the Tech space that have been announced. Microsoft, Google, and Amazon have swung the axe on thousands of jobs in the past few weeks.
While Tech is firing, other sectors like travel, healthcare, and mining are hiring.
“It’s a large-scale restructuring,” said Michael Montgomery of S&P Global Market Intelligence.
“But the labor market goes through large-scale restructurings all the time. It’s just looking back at history, you don’t think about them as being a restructuring.”
On Tuesday, the RBA once again raised the cash rate by 25bp to 3.35%.
The move was expected, so the market was more focusing on the bank’s statement and what governor Phil Lowe would say.
In the accompanying policy meeting statement, the RBA said:
“The Board’s priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy.
“And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later.
“The Board is seeking to return inflation to the 2–3 per cent range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one.”
But it was this sentence that caused the ASX to plunge half a per cent that day.
“The Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.”
According to CoreLogic, the hike will eat into the average Australian pockets in the following way:
Today's rate hike adds approx:
$77/month in repayments to a $500k variable rate owner-occ mortgage & $116/month to a $750k mortgage
— CoreLogic Australia (@corelogicau) February 7, 2023
Strangely, the central bank’s boss Phil Lowe decided not to give a press conference after the policy meeting, like he always did.
Instead, he has chosen to make a speech and address Australia’s parliament this Friday, February 17.
Crude oil’s 9% gain last week suggests that China might be on its way back.
Oil traders continue to be encouraged by China’s transition to living with Covid.
“While the buzzword for large parts of the global economy this year is ‘resilience’, when it comes to China it’s more a question of just how strongly it will bounce back,” said OANDA analyst, Craig Erlam.
The market assumption has been that, once China began removing restrictions late last year, the second half of 2023 would see growth, supported by the CCP’s fiscal and monetary measures.
“Now it would appear those expectations are being brought forward, which should stimulate demand for oil and other commodities,” said Erlam.
Officially, China recorded 2% GDP growth for 2022, its second-lowest pace since the 1970s. And for the first time since 1976, the US has pipped China after reporting a 2.1% growth last year.
The question now is whether a China rebound this year could lift the global economy out of a recession.
All sources from Commsec and Investing.com
In Australia, the main headlines this week will be the unemployment rate on Tuesday, and RBA boss Philip Lowe’s address to Parliament on Friday.
NAB business survey, Monthly consumer confidence index
CBA household spending indicator, Overseas arrivals, Unemployment rate
Reserve Bank Governor Lowe testimony in Parliament
Overseas, the focus this week will be on US CPI and EU unemployment rate
US Consumer inflation expectations
US NFIB Business optimism index
EU unemployment rate
US Retail sales, US Industrial production, US NAHB Housing market index
EU industrial production
US Producer Price Index, US housing starts, China House price index
US Import/export prices
EU current account
The listing date shown is from the ASX, and they could change at short or without notice.
Listing: 16 February
IPO: $5m at $0.20
SQX’s current focus is on copper and gold mineralisation at its Ollenburgs and Scrub Paddock Prospects, in the underexplored Esk Basin in southeast Queensland and situated near major regional infrastructure and population centres.
Scrub Paddock has been identified as a potential gold-copper porphyry, and features more than 20 mine workings and an area of comparable scale to Cadia/Ridgeway.
The company intends to drill high priority targets immediately upon listing, with the aim of defining an economic mineral resource.