As the US Fed gets closer to the end of its rate rise campaign, markets are moving in anticipation.
Bond yields are falling as the yield curve steepens. Gold is rallying and touched a new all-time high.
But growth is falling rapidly, and commodities are responding. Oil had a big fall during the week. Iron ore is plunging fast. Copper, nickel, zinc, lithium, rare earths, and uranium have all been drifting lower for months.
The banking crisis in the US rolls on as commercial real estate property stocks hit new multi-decade lows.
Aussie banks took a big hit during the week after National Australia Bank’s [ASX:NAB] results, and I reckon the S&P/ASX Financials Index [ASX:XFJ] has further to fall.
The ASX 200 had a bad week but was only down 1.6%, which is pretty impressive considering all of the above.
But I am concerned what will happen if prices head below the 200-day moving average, which is 2% below current levels.
Market volatility has been crunched lately, so we need a catalyst to move the market out of its funk. I think the risk is to the downside, but after two years of grinding sideways motion, I am prepared for any outcome from here.
If we see another few banks in the US hit the wall and the commercial property woes go nuclear, it could set off a chain reaction in markets to the downside due to the technical set-up I explain in the ‘Closing Bell’ video above.
With inflation remaining sticky, a banking crisis, and a rising gold/oil ratio, the moons could be aligning for a sustained breakout by gold to new all-time highs and a strong run in gold stocks.
In today’s Closing Bell video, I give you a detailed look at the current set-up for gold and update you on the moves in the S&P 500 and ASX 200.
Regards,
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Murray Dawes,
Editor, Money Weekend
