The ASX surged in early morning trading, ripping almost 100 points and 1.29% higher as of about 11:45am.
The gains weren’t to last, however, with the index slipping to a more modest 58.60-point or 0.83% jump in trading today, settling at 7,131.80.
Record-high gold prices gave the ASX its momentum, with spot gold prices rising to $3,109.8 per ounce as of yesterday.
The last time gold was worth anywhere near this much was in August of 2020, as global uncertainty around the COVID-19 pandemic reached a crescendo and drove prices up to $2,848.52 per ounce.
Bitcoin also did its part, bouncing up to US$40,000 – more on that in a moment.
The sectors were mostly in the green today. Info Tech made a strong showing with a 2.15% bounce, followed by Real Estate (+1.58%) and the mining-heavy Materials sector (+1.51%) which was buoyant on high gold prices.
Utilities (-2.40%) and Energy (-1.34%) went in the other direction, dragged down by falling oil prices and a failed takeover bid from Brookfield and EIG for Origin Energy.
That takeover scheme needed 75% of shareholders to vote in favour to succeed but received only 69% of the vote.
West Texas Crude shed 1.63% today, one of the few commodities to falter in today’s trading.
Tin was at the head of the pack with a 2.03% gain, followed by gold (+1.76%), copper, nickel and zinc, which all gained more than 1.3%.
Bitcoin hits US$40,000 for first time since May 2022
eToro market analyst Josh Gilbert explains why Bitcoin has rallied this year, rising to US$40,000 after falling as low as US$16,452 in November last year, and warns against emotion-based investing.
"Bitcoin has bounced back with a vengeance in 2023. The asset class has gained over 140% so far this year – a stark contrast to its 2022 performance,” Gilbert writes.
“Retail investors were most bullish on crypto heading into the fourth quarter, as per eToro’s global retail investor survey, and they’re being rewarded for that bullishness, with bitcoin hitting $40,000 today for the first time since May 2022.
“Bitcoin’s performance this year is a reminder that crypto has a place in a diversified investment portfolio.
“Whatever time horizon you look at, risk-adjusted returns for bitcoin are dramatically higher than any other asset class.
“This recent rally is being driven by the growing expectation that the US Federal Reserve will cut interest rates in the first half of 2024 and that an impending US Spot Bitcoin ETF will be accepted.
“The potential for multiple ETF approvals in January could open the door for trillions of dollars to flow into bitcoin in the future.
“On top of this, there are other key catalysts at play. We have the bitcoin halving in April and new US accounting rules being rolled out next year that will make it easier to hold crypto assets – meaning this rally could build momentum into 2024.
“Investors will be eyeing the 2021 all-time high of around US$69,000 as the target in 2024.
“Investors should remember to put emotion aside when we see significant rallies in asset classes.
“Opting for a solid strategy and remembering one’s investing goals are key to effectively navigating high-excitement and high-pressure market events."
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