News during the week that China’s imports and exports fell far more than expected hasn’t got much airplay, but is important news in my view.
If you want a real-time understanding of what world growth is doing, I reckon Chinese imports and exports is a good place to go looking.
Commodities took a hit after the news and copper, in particular, is looking shaky if we see another leg down. Iron ore is also looking like it’s ready to have another leg lower in the short term.
Oil, on the other hand, confirmed a monthly buy pivot last month from major support and continues to strengthen. Uranium has also caught a bid and many uranium stocks in Australia had a great week.
So if you’re looking for opportunities, oil, gas, and uranium are the sectors that look hot at the moment.
US interest rates are worth keeping an eye on as we move forward because US 10-year rates are marching higher and threatening the high reached late last year of 4.33%.
A move above there could start to put pressure on stocks in the short term.
But as I show you in today’s Closing Bell video above, US 10-year bond yields usually peak with a double top of some description, so we may be getting close to a buying opportunity for bonds.
Small and midcap stocks continue to underperform. The crash in speculative stocks has been quite incredible to witness over the last couple of years.
There will be immense opportunities down the track when momentum turns up, but while interest rates remain elevated, investors are steering clear of high-risk situations, and many are still trying to get out of bad positions.
The ASX 200 is in a holding pattern and won’t break out of the stalemate until either something breaks, or inflation is defeated.
Whatever the path of markets in the short term, the clock is ticking on this correction and history says we’re closer to the end than the beginning.
Until next week,
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Murray Dawes,
Editor, Money Weekend
PS: Talking of momentum, my colleagues Greg Canavan and Kiryll Prakapenka talk all about momentum trades in this week’s episode of What’s Not Priced In. Be sure to check it out here.
