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FIVE at FIVE AU: ASX rebounds after difficult week marked by fears of escalating conflict and rate increases

Published 22/04/2024, 04:08 pm
© Reuters FIVE at FIVE AU: ASX rebounds after difficult week marked by fears of escalating conflict and rate increases
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After setting a new 20-day low, the Australian sharemarket was up again today, gaining 81.90 points or 1.08% to 7,649.20.

Top-performing stocks were South32 Ltd and Lovisa Holdings Ltd, up 5.64% and 4.87% respectively.

The index has lost 1.78% for the last five days but is virtually unchanged over the last year to date.

Last week the local share market slumped to its lowest level since February against the backdrop of escalations in the Middle East conflict. The ASX 200 finished down 74.8 points on Friday, or 0.98%, to 7,567.3, a weekly loss of 2.8%.

The broader All Ordinaries fell 81.5 points, or 1.03%, to 7,817.4 as concerns lingered that US inflation could push back Federal Reserve interest rate cuts, while safe havens including bonds, gold and oil prices were looking good.

Domestically, interest rate markets are no longer pricing in a cut before the end of the year, with continuing strength in the jobs market adding to the case for the Reserve Bank to keep rates higher for longer.

Every official ASX sector finished in the red, with energy stocks the least affected.

With the start of a new week, today was a completely different story. Across the sectors it was a sea of green, with Health Care leading the charge, up 1.97%, followed by Communication Services (1.73%) and Industrials (1.51%). The one exception was Energy, which was down 1.51% at close of play.

Bitcoin halves

Last week, Bitcoin halved for the fourth time and eToro market analyst Josh Gilbert had this to say:

“This week, investors will be focused on the market's reaction to the halving, given we’ve seen a sharp sell-off over the past few weeks amid rising geopolitical tensions and a pushback on rate cut expectations.

“The halving’s impact isn’t instant but it does, in the short term, provide the catalyst to reignite retail interest, which we’ve yet to really see in 2024 compared to previous cycles. As expected, we’re seeing a slightly muted reaction to the halving event, given its longer-term impact.

“The performance of bitcoin around halving events speaks for itself but when we add in the introduction of the institutional interest we have in 2024, this halving makes for one of the most exciting we’ve had yet. Bitcoin’s supply is being cut at a time when institutions are buying the asset by the bucket load.

“Following the halving, only 450 bitcoin are being mined each day, while institutions have accumulated 835,000 BTC since their inception. If we continue to see the interest in the ETFs we have since the start of the year, there is an evident supply/demand imbalance.

"So, although we will likely see reaction muted in the short term, particularly as geopolitical tensions persist, the closer we move to rate cuts coupled with the recent halving, bitcoin could be eyeing six figures in this next cycle."

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