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Greetings and welcome to HotCopper’s the ASX Today for Wednesday of Week 10, I’m Jon Davidson, and it’s not often we see global risk-off sentiment become so risk-off that people even sell their gold exposure, but that’s what we’re seeing.
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Overnight, we saw gold plummet below US$5,050 an ounce, shedding some $350 worth of value. Silver also declined, though that just largely tracks the price of gold; but over in South Korea we saw the KOSPI index fall -7% out the gate on Wednesday, another momentum trade of late.
It looks like risk-off sentiment has gone back to its traditional roots: U.S. Treasuries or government bonds, and the USD, which has firmed – though only somewhat. What that says to me is there’s a flight to the most boring risk-off assets, outside of just putting your cash in a term deposit account, which (presumably) many investors are doing.
And so what of the black gold, oil? Well, that’s probably the bigger problem for us in Australia, despite the fact that the ASX200 is down under 9,000 points again on war fears. Thanks, Donald. Brent Crude hit US$85/bbl overnight before paring back to US$82/bbl when Trump said the US government would help insure war risk for oil tankers in the Strait of Hormuz, and provide military escort.
That calmed markets, but only briefly. Oil volatility is here to stay. But the problem is, according to Westpac analysts, that could make inflation surge down under: in the worst case scenario, fuel prices at home could go as high as $3/L, which would absolutely launch headline CPI back above 4%.
Bear ETFs continue to climb at the expense of bullish investors, and the Breakwave Tanker Shipping ETF is at all time highs as bets on long-term shipping pain continue. In a sense, it’s COVID all over again. The question is: When does the drop stop, and when is it time to pick up a leveraged Bull ETF? I don’t know, but it’s a question I’m asking myself.
Looking around the traps, Goldman Sachs retained its Buy rating on family tracking app Life360 but lowered its target slightly; while that’s the case, Goldman sees Life360’s advertising arm picking up speed for the company.
Elsewhere, Peninsula Energy fell nearly -10% based on no Wednesday news. It looks a lot like swing traders are back to the PEN, that being the company’s ticker, which was a definite plaything late last year. It follows 4D Medical rising through this week despite not being related to war, suggesting day traders are hungry for targets to juice which sit outside the tentacles of the war in Iran.
Finally, if you wanted a reason why the ASX200 is falling, both Commonwealth and BHP down Wednesday, BHP down over -3%, as investors look for safer places to put cash. In contrast, CBA down -1.5% in mid arvo trade.
That’s The ASX Today for Wednesday, I’m Jon Davidson, have a great night and we’ll see you on Thursday.
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