The ASX is down today.
The S&P/ASX200 was down 11.70 points or 0.16% to 7,146.30 after setting a new 100-day high. Over the last five days, the index has gained 3.07%, but is down 4.01% for the last year to date.
Bottom-performing stocks in this index were Elders Ltd and Ramelius Resources Ltd, down 21.96% and 6.99% respectively.
Elders dived after long-serving chief executive Mark Allison announced his retirement, with the company also hit by uncertainty around summer and winter crop harvests.
“The timing is right and will allow for a smooth transition and leadership refresh for Elders‘ next phase of growth,” Allison said.
As for the unrelenting weather conditions, Allison said, “Recent extreme rainfall events across the eastern states have created some uncertainty in affected cropping regions and concern about reaching full harvest potential for both summer and winter crops.
“The rural products outlook remains positive, with high demand particularly for agricultural chemicals, fertiliser and seed. However, the agricultural industry will await assessment of the full impact of the extreme wet conditions and flood events to realign expectations for the FY23 season.”
Of the sectors, Materials had a great day up 3.37%, but it was the only one. Industrials took the hardest hit, losing 2.28%.
3 things to watch for the week ahead
Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia this week.
1. RBA Meeting Minutes
This week sees the release of the RBA’s minutes (Nov 15) from their most recent monetary policy decision in early November. The meeting saw the Reserve Bank lift interest rates by another 25bps to bring the cash rate to 2.85%. The 25bps move would have likely been heavily discussed, with a 50bps move almost certainly considered after the red-hot inflation reading late in October.
The RBA forecasts that headline inflation is set to peak around 8% at the end of 2022, and the board may take some relief from seeing US inflation that may be finally starting to ease.
It seems that Australia can avoid a recession depending on how the RBA navigates this financial tightening cycle and for now, it seems they are on the right track. The minutes will provide some insight to investors on why they opted for a 25bps move and likely show a reiteration that it remained resolute in its commitment to bringing inflation to target levels and will do what is necessary to achieve that.
2. Unemployment Rate
Last month’s unemployment rate stayed at 3.5% after dropping to decade lows in July. This week's reading (Nov 17) will be closely watched to see how strong the economy is and whether the Reserve Bank's interest rate increases are having the desired effect of cooling demand.
Most would assume a low unemployment rate is a positive sign, which for consumers it is, but the impact of low unemployment isn’t as simple as it seems. The most significant impact is wages. Wage inflation is caused by rising labour demand as the unemployment rate falls. With fewer people available to work, employers are forced to raise wages to attract and retain talent.
The RBA wants to see the unemployment rate rise but even if there is an increase in joblessness, we will likely continue to see the rate stay near these decade-low levels for some time.
3. A crazy week in crypto, but what’s next?
Last week saw bitcoin register a new low for the year, dropping below US$16,000 amidst the fallout from FTX’s liquidity issues.
The industry will learn from some of the significant missteps we have seen this year, including Luna and Celsius, which will almost certainly lead to more transparency across the space long-term, helping to bring more accountability and trust into the crypto market. Bitcoin and other cryptoassets will likely remain under pressure until we see more clarity around this issue.
The easing of US inflation provided some relief to bitcoin and other crypto assets last week, with signs that inflation may be moving in the right direction. This data print couldn't have come at a better time, and crypto investors will be breathing a sigh of relief. However, this is a short-term boost to markets and there is still a long way to go to bring inflation down to the Fed's target rate.
As inflation does begin to come down and we see clear signs of rate hikes having their desired effects, investors will slowly begin to add risk assets, such as crypto assets, back into their portfolios again.
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