The ASX has made a strong showing this week, gaining 3.38% over the last five days.
The other markets were also in the green across the board, with the Nasdaq (+6.75%) and S&P 500 (+4.60%) gaining the most, perhaps because the latest CPI report indicated inflation is slowing in the US.
Commodities were almost all up as well this week, with only nickel (-3.48%) and lead (-2.36%) shedding value as copper (+9.21%), aluminium (+7.86%), zinc (+6.72%), and tin (+6.47%) led the way.
More on the sectors and market movements for the week with Wealth Within chief analyst Dale Gilliham.
What are the best and worst performing sectors this week?
Dale Gillham, Wealth Within chief analyst and international bestselling author of 'How to Beat the Managed Funds by 20%:
The best performing sectors include Materials up over 3% followed by Energy and Consumer Staples up over 2 %. The worst performing sectors include Utilities down under 1% followed by Information Technology, which is just in the green and Healthcare up over 1%.
The best performing stocks include Block and South 32, which are both up over 7% followed by SEEK and Mineral Resources, as they are both up over 6%. The worst performing stocks include Computershare down over 5% followed by Whitehaven Coal (ASX:WHC) down over 4% and Suncorp down over 2%.
What's next for the Australian stock market?
They say January is a good indicator as to how the stock market will unfold in the coming year and while I generally don’t like these clichés, so far January is shaping up to be a great lead into 2023.
So far, the All-Ordinaries Index is up over 3% for the month and I am expecting it to trade higher.
In my last report of 2022, I mentioned that while investors may be concerned about the Australian stock market and the economy in 2023, I did not believe they need to be overly worried.
I also suggested that the current move down was a normal part of market cycles, and I did not believe it would fall much further.
While the move down went a little longer in time than anticipated, the market is unfolding as I expected.
Based on the charts, the Australian stock market is expected to trade higher over the next four to eight weeks up to around 7,800 points and possibly challenge or break the previous all-time high of 7,956 points set back in January 2022.
Rather than being gloomy about the economy, right now is an exciting opportunity to buy good stocks at cheaper prices and set yourself up for 2023.
Is crypto on the mend?
Exness senior market analyst – MENA Wael Makarem shares some insight into the crypto market, which is showing the first signs of recovering from last year’s bloodbath:
Cryptocurrency markets have improved in the last few days with the total market capitalisation exceeding the levels recorded by the end of 2022.
The market as a whole seems to be recouping losses after the damage done by the failure of FTX as traders’ confidence in the market recovers.
The market was under pressure as FTX’s difficulties spread to other firms in the industry, creating structural fears over the market’s capacity to operate.
The shock could however help the industry move forward and improve practices.
As more independent assets, major cryptocurrencies like Bitcoin and Ethereum have benefited from the recent issues in the market and have recorded stronger market dominance, expanding the share to the detriment of other smaller assets.
This trend could continue as investors could shy away from smaller cryptocurrencies in regard to the risks that led to the demise of small projects.
However, the market’s price levels stayed relatively limited compared to those of 2022 and could remain exposed to the next steps in US and European monetary policies. In this regard, traders could react to US inflation figures later today.
Lower-than-expected inflation figures could boost cryptocurrency prices and could help the market cement the current rebound.
Overall, cryptocurrencies could find better conditions this year if the Federal Reserve moves toward a softer monetary policy.
The market is pricing in the possibility of interest rates in the US to stabilise and eventually start declining this year, which if happened, could fuel more risk-taking among investors in crypto markets and other risky assets.
Inflation slows dramatically in the US
And finally, to round out our market commentary for the week, eToro US investment analyst Callie Cox breaks down what the latest CPI report might mean.
Inflation is slowing dramatically, which shows the economy is getting back into balance without seriously harming the job market.
What we’re in now fits the definition of a soft landing, and it’s adding to the pile of evidence the Fed needs to let up on rate hikes and aggressive policy. The market could interpret this as a time to pile back into risk, though.
I wouldn’t get too excited about this report, though. Services inflation still hasn’t peaked, and that’s the kind of inflation the Fed wants to get under control.
Luckily, real-time data shows us we’re making progress on the services inflation front, but the makeup of inflation hasn’t really changed from what CPI has shown us.
Services inflation is still a problem, and that gives the Fed enough reason to keep rates high.
On the whole, this report is good news. The Fed is pulling this off. But investors need to be careful.
Inflation still isn’t fully handled, and it’s easy for markets to get carried away. We may not see new highs until inflation is fully under control.
Small caps wins for the week
Tempus Resources soars 35.1%
Tempus Resources Ltd (ASX:TMR, TSX-V:TMRR) has gained 35.1% to its share price over the last five days after hitting bonanza gold grades at the Elizabeth Gold Project of 28.1 g/t gold over 28.5 metres.
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Surefire Resources leaps 33.3%
Surefire Resources NL (ASX:SRN) shares jumped 33.3% this week, after the company fielded a promising set of vanadium assays from the Victory Bore Vanadium Project, boosting the deposit’s resource upgrade potential.
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Azure Minerals jumps 31.1%
Azure Minerals Ltd (ASX:AZS) shares traded 31.1% higher over the week on news the lithium miner had welcomed global lithium producer SQM as a cornerstone investor.
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Provaris Energy lifts 24.4%
Provaris Energy Ltd (ASX:PV1) shares are up 24.4% after the company signed an MoU with Norwegian Hydrogen AS to collaborate on the identification and development of green hydrogen value chains within the Nordic region.
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Armada Metals up 22.8%
Armada Metals Ltd (ASX:AMM) gained 22.8% to its share price after securing the renewal of its key Nyanga Project permit for three more years.
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