Week Ahead: Market shows early signs of reversal ahead of CPI

Market shows early signs of reversal ahead of CPI

The equities market began the 2023 calendar year with some late momentum as the US employment data came back softer than expected. Wage growth grew less then with a 0.3% rise vs a 0.4% expected rate. Although the unemployment rate continues to drop. The market took the overall figures as a positive with the hope that inflation is reaching its peak. This may lead to the Federal Reserve lowering its official interest rate soon.

The S&P 500 ended the week up 1.45%, the Dow Jones was almost identical with a 1.46% move to the upside, whilst the Nasdaq was the weakest performer lifting by 0.92%. From a technical perspective, all three indices indicate that they may be forming somewhat of a bottom or base. The ASX200 also rose by 1.01% although it has not yet traded following on from the Friday’s employment figures which may provide a positive catalyst.

Brent Crude oil had one of its weakest weeks in months, as global growth concerns saw the price drop by 8.70% to 78.47 USD. The price is retesting its 200-week moving average as sellers continue to drive the price down. Gold on the other hand has continued to rise higher and reached 1865 USD per ounce as it tests its highest price in more than 6 months. A weaker US dollar and the commodity acting as a haven for investors is proving to be a positive for the price.

Stocks In the Spotlight

WR1 (Winsome Resources Limited)

The company is the latest in a spate of junior lithium miners to see its share price hit all-time highs after impressive first results from its Adina site assays. The results showed 1.34% Li2O over 107.6m and a 30-metre section of 2.21% Li2O between 41-71 metres. This news sent the market into overdrive and launched the share price 34.15% higher from $1.265 to $1.65. With a further 3 lithium mines in Quebec, Canada WR1 offers potential exposure to a tier 1 jurisdiction dedicated to the development of lithium. The company is expecting announce more results to the market in the next few weeks.

QAN, (QAN)

Australia’s largest and oldest airline has almost completely recovered to its pre covid 19 levels after nearly 3 years. With China continuing to reopen its borders to international travelers and a strong overall demand for travel the company has increased its expected Earnings before tax to 1.45 billion dollars. Global oil prices may also help the company lock in cheaper fuel in the medium to short term and lower its operating costs. The company is still at the mercy of global political factors with the Australian government requiring those travelling from China to provide a negative Covid 19 test potentially being a dampener in travel within the Asia/Pacific region.

TLX, (Telix Pharmaceuticals)

The Pharmaceutical company has seen enormous growth since its launch of Illuccix cancer prostate cancer, screening technology, launched in the USA in 2022. The company has recorded unaudited revenue of AUD 76.8 million dollars for the recent quarter, a 39% for the Prior corresponding period. The company is a developer and producer of both cancer imaging and therapy technologies and has multiple avenues to grow in the medium to long term future. With international expansion and further approvals on the cards, the company can provide long term exposure to the medical industry. The share price is currently trading at $7.40.

Weekly Ex Dividend dates

9 January

EIGA – Einvest Income Generator Fund

PPT – Perpetual Ltd

10 January

PMV – Premier Investments

11 January

IVE – Ishares MSCI Eafe ETF

TRA – Turners Investment Group

Key Economic Events -Australian Eastern Standard Time

Tuesday

9:10pm – CAD BOC Gov Macklem Speaks

Wednesday

1:00am – USD Fed Chair Powell Speaks

11:30am – AUD CPI y/y

Friday

12:30am – USD CPI m/m

12:30am – USD CPI y/y

12:30am – USD Core CPI m/m

6:00am – GBP GDP m/m

Saturday

2:00am – USD Prelim UoM Consumer Sentiment