Good afternoon and welcome to HotCopper‘s ASX Today for Monday of Week 6. I’m Jon Davidson. If you’re familiar with watching the daily ebbs and flows of the market, you almost definitely already know the big ticket item: gold and silver prices tanked last Friday on the U.S. session, widely believed to be a reaction to Trump’s pick for the new Federal Reserve chair, Kevin Warsh.
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While many expect the new incoming Fed chief to be under great pressure to cut rates, something Donny has made no secret of strongly pushing for, it appears investors are, for now, satisfied that the appointment could have been worse, suggesting less volatility than what other candidates may have introduced.
But with the USD still under pressure and the Japanese bond yield rising, which has some investors concerned we could be about to see a massive sell-off in US equities as Hedge Funds reposition to avoid a more expensive Yen, it’s likely gold demand – and silver, for that matter – sees continued strength.
Couple all of that in with the reality of a looming rate hike down under later this week, unless you’re an ANZ analyst, and fresh concerns around the AI thematic in the U.S., and you’ve got a situation where US futures are red, checking in during the latter half of the Australian session.
Update Feb. 2, 3:01 pm: The audio version of Monday’s ASX Today includes the claim that ANZ analysts predicted a rate pause from the RBA; that is incorrect, and refers to analysis for the Bank of England. We regret the mistake.
When it comes to AI, worth noting that over the latest weekend, OpenAI and NVIDIA revealed they’re no longer committing to a US$100B cross investment.
That said, the fear and greed index has pushed back into greed territory with last week’s rise to 7,000pts on the S&P500, but so far, a bit of a jog to get back there. If you’re the type of person who follows it, also worth noting that, like gold and silver, bitcoin too has been slaughtered in the last few days of trades.
The ASX 200 this week will likely be most reactive to precious metals prices, further volatility in the USD, and, as ever, what happens on Wall Street night by night.
Looking around the traps: Analysts at unlisted HSBC bank predict the RBA will hike rates this week, making Australia the first G10 country to do so. Meanwhile, Graincorp (ASX:GNC) shares sank -16% on an earnings miss, which ultimately blamed an oversupplied market, and Commonwealth (ASX:CBA) posted strong gains Monday as a metals sell-off saw investors head back to relative safety.
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