Fed to raise interest rates. Retail sales continue to perform well. By Proactive Investors

The ASX is set to open higher today after a solid result on Wall St on Friday.

Futures are trading 12 points higher, up 0.16% at 8:20 am.

The S&P 500 Index was up 0.2%, up 0.9%, and the index was up 0.1%.

The market has been strong in 2023, but that trend could accelerate after the Federal Reserve’s cash rate verdict on Thursday.

Many analysts expect lower interest rate hikes in the US due to lower inflation.

“A slowdown in the pace of rate hikes would give the Commission time to fully assess the economic impact of the tightening so far,” Moody’s Investors Service reported.

The market expects a 25 basis point rate hike, taking benchmark lending rates between 4.50 and 4.75%, levels last seen in 2007.

“They are seeing the desired effect of the policy,” Rubira Faloochi, a high-frequency economist, told AFP. “They don’t want to push the economy into recession,” she said.

Here’s what we saw (source Commsec):

• The euro fell from around US$1.0895 to US$1.0835 and was near US$1.0865 in late US trading.
• The dollar traded between 70.90 cents and 71.25 cents and was around 71.10 cents in late US trade.
• The Japanese yen traded between 129.60 yen and 130.25 yen to the dollar, and hovered around 129.85 yen in the closing stages of US trading.
• Global oil prices fell by 1.6% on Friday. Traders blamed the fall in oil prices on rising Russian supplies and weekend profit-taking selling. OPEC+ delegations meet next week, and central bank decisions are expected in the US and Europe. T.
• The price fell 81 cents or 0.9% to $86.66 a barrel.
• US Nimex prices fell by US$1.33 or 1.6% to US$79.68 a barrel. Brent for the week he fell 1.1%. Nimex fell 2%.
• Base metal futures prices fell as much as 4.5% on Friday. US Aluminum Futures Price Dropped 0.7%. US prices fell 1.1% he. Reuters reported that lead rose 4.6% in the week, and noted that copper stocks were at his lowest level in 10 months.
• The price dropped 60 cents to $1,929.40 an ounce. In late US trading, it was trading near US$1,927 per ounce. In one week, gold he rose by $1.20 or 0.1%.
• Iron ore futures rose 21 cents per tonne or 0.2% to US$122.70 per tonne. It was up 54 cents or 0.4% in one week.

3 things to watch out for next week

eToro Market Analyst Josh Gilbert shares three things to watch in Australia going forward.

1. Federal Reserve Interest Rate Decision: Deceleration?

A slowdown in the Fed’s interest rate cycle looks imminent and the market expects Jerome Powell to raise rates by 25 basis points this week. More optimistic for markets given that rates are likely to remain below 5% in 2022, lower than some Fed officials expected, if the Fed hits 25 basis points can be a point of view.

The market already believes we are nearing the apex of the Fed’s rate hike cycle as inflation continues to fall and the Nasdaq is up more than 10% in early 2023. The consensus is for two more 25 basis point hikes in February and March and another decision. It can be a sign of suspension.

But remember, the Fed has made it clear that we need to see more signs of easing inflation. Inflation is clearly picking up, but the Fed wants to make sure that prices are under control.

It is therefore important for investors not to get ahead of themselves despite a good start to the year. Because while a moratorium may be on the horizon, interest rates are likely to remain high until inflation returns to his 2% Fed target.

2. Retail sales AU: Aussie on the rise

Australian consumers clearly remain resilient in 2022, but with interest rates rising, inflation starting to subside and the CPI reaching 8.4% in December, consumers are optimistic about the new year. Consumer habits may begin to curtail, and retail sales may begin to decline. His December retail sales this week (Jan 30) could end a strong year for consumer spending, with monthly gains.

December is expected to be up 0.4% from a strong November figure of 1.4%, thanks to Black Friday and Cyber ​​Monday sales. It will be interesting to see whether personal consumption such as shopping for gifts and eating out will continue toward the end of the year.

Department store spending continues to rise in November and is likely to do the same in December, with Myer reaping the benefits as it records its highest sales in 20 years in the last five months of 2022 doing. Waste from Christmas sales.

3. Australian investors are positive but fear inflation and recession

According to eToro’s latest Retail Investor Beat survey*, the majority of Australian retail investors are dismissing the recession that has plagued financial markets for more than a year.

Emotions are on the rise, with 77% of Australians surveyed feeling confident about their portfolios. It may come as a surprise that investors are so optimistic after a difficult year for investing, but the majority of this cohort thinks years, decades, and the ASX200 Outperformed most major markets in his 2022.

When asked about the biggest risk for 2023 as a whole, 16% of respondents cited inflation, while 24% saw a global recession as the main threat. Investors will find that inflation may not have peaked in Australia and is well above the RBA’s target.

Last week’s high inflation means interest rates will rise again after a pause may have been on the card. But shrewd retail investors are clearly investing for the future and maintaining a long-term mindset, primarily by steadily increasing investments in equities and more defensive asset classes.

*Q4 Retail Investor Beat is based on a survey of 10,000 retail investors across 13 countries and 3 continents. The following countries had 1,000 respondents – UK, USA, Germany, France, Australia, Italy and Spain. He had 500 respondents from the Netherlands, Denmark, Norway, Poland, Romania and the Czech Republic. The survey will run from December 14 to 24, 2022 and was conducted by research firm Appinio. Prior to Q2, previous waves of this study were conducted quarterly in conjunction with Opinium. A retail investor was defined as self-directed or advisory and required that he hold at least one stock, bond, fund, investment ISA or equivalent investment instrument. You don’t have to be an eToro user.

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