Week ahead: Is bad news behind us for the US and Aussie Equities. The next catalyst for Bitcoin linked investments
US and Aussie equities could move up here. Three things to consider
Firstly, It's a quiet and shorter week for the Aussie share market ( $S&P/ASX 200(.XJO.AU$), so leads will be taken from abroad, with the S&P500 ( $S&P 500 Index(.SPX.US$ ) trading at a record high and appearing to be supported at these levels for now.
With 'bad news' seemingly behind us and priced into markets, it seems equites could likely head higher for now. This week the Fed'ss preferred inflation gauge, PCE for December is released this week and some are expecting that inflation could fall below the Fed's 3% target, (but consensus expects a 3% print). If it falls below 3%, it could mark a flag for equities to move up.
Secondly, the ASX200 has some catching up to do, but it could attempt to stage a rebound here. The ASX200's mining sector (including $BHP Group Ltd(BHP.AU$ , $Rio Tinto Ltd(RIO.AU$ $Fortescue Ltd(FMG.AU$ ) could stage a recovery here as the sector and its heavy weights have been in oversold and correction territory (down 10%) from their December highs.
Meanwhile, ASX200's health care sector is charging further into bull market territory, up 25% from its October low. Telix Pharmaceuticals ( $Telix Pharmaceuticals Ltd(TLX.AU$) is rallying ahead of potentially also listing on the Nasdaq. While ResMed ( $ResMed Inc(RMD.AU$) is clawing back after being sold off last year on Ozempic fear selling. And $CSL Ltd(CSL.AU$ shares are continuing to rip higher and are back over $290 as its profitable Behring division (blood plasma therapies) is benefiting from improved plasma supply and bets are on for CSL to get back to pre-pandemic. Also consider, it'ss flu season in the northern hemisphere and sales of its influenza vaccines are expected to be bolstered by the cold snap in Europe.
Thirdly, it seems the bad news could be behind us for now. US earnings season kicks into gear. The Fed blackout period is ahead. And the Fed's inflation gauge could undershoot 3%.The US Fed funds futures markets sharply pared bets back of a March rate cut. Expectations of a March cut dropped from 80% at the start of January to 50%. That was largely as some inflation markets rose (oil, uranium and shipping costs and insurance), plus, the big catalyst was that Fed Governor Christopher Waller, said the Fed was in no hurry to cut rates. So…..the bottom line is that markets will likley focus on US earnings reports and outlooks, which could be solid on the back of rate cut expectations and relatively strong employment. Also consider, there are not expected to be market jitters from Fed speak, as we are heading into the blackout period ahead of the Jan. 30-31 FOMC meeting.
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Bitcoin's price is down 15%. But 'Bitcoin halvingis ahead, which could support its price higher. Three things you need to know
Firstly, Bitcoin's ( $Bitcoin(BTC.CC$) price has fallen 15% from its early January 2024, high of $49,021, which was its highest level since December 2021.But the price of BTC now trades at $41,597 on the back of profit taking, and after $Bitcoin(BTC.CC$ hit technical resistance and retraced. Bitcoin rose 157% in 2023 in anticipation of the US interest rate cuts from the Fed his years. Plus it rose ahead of the game changing event of the SEC approving bitcoin ETFs in January. And last week they had their first week of full trade, with 11 ETFs garnering billions of dollars in assets, including ETFs ARK Invest, BlackRock, Grayscale, VanEck and more.
Secondly, what do you need consider with Bitcoin now? Well, it depends if you are trading or investing, in maybe the 11 BTC ETFs or the BTCs proxies Nvidia ( $NVIDIA(NVDA.US$ ) and Block ( $Block(SQ.US$, $Block Inc(SQ2.AU$ ). Either way, you'll probably want to stay protected, meaning, you learn when to buy if the king cryptocurrency starts to rebound, or learn when to sell to capture profits or cut losses.
Thirdly, the technical indicators suggest Bitcoin could be in slightly oversold territory, so you may see some dip buying. Plus Bitcoin halving is coming up (likely in May 2024) and that may cause its price to rise.
What is halving? Bitcoin halving is when the reward for Bitcoin mining is cut in half. It occurs every four years. While the reward for miners is cut in half, it also lowers the supply of new coins, while demand remains. And as a result, Bitcoin's price has rallied after a halving event. Why does halving occur? It was written into the mining algorithm so that the amount of coins in circulation reduces, and that, in theory, allows the currency to remain scarce and appreciate in value.
The first bitcoin halving was in November 2012, then July 2016, then May 2020. So the next is around May 2024. The first reward was 50 BTC per block when Bitcoin was created 2009. And that drops by half every four years with the last halving being 2140. At that point, there will be 21 million BTC in circulation and no more coins will be created
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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