What to Watch This Week: A Barrage of Catalysts That Could Move the Needle and Stoke Up Volatility
This week's market focus includes two key US inflation reports ahead of the FOMC meeting, the Trump-Harris debate, and a potential oil rebound after recent lows. Australia's Treasurer plans to visit China to discuss critical minerals and trade, while the US hosts a major clean energy conference, putting clean energy metals in the spotlight. The S&P/ASX 200 rebalance sees gold stocks rising and oil names removed, reflecting shifting market trends.
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On the data front, we will get two final US inflation "speedometer" reads ahead of next week's FOMC meeting. One tracks consumer price rises, while the other measures producer price inflation (out Thursday and Friday, AU time).
The showstopper might be the Donald Trump and Kamala Harris debate on Tuesday. The risk to markets is that some investment banks are concerned Kamala Harris is now leading in the polls. If her wave of support rises, it could unnerve markets.
Eyes are on oil. I am watching this week's price action is key. Oil prices are moving up (+1.3%) on Monday to US$68.59 after hitting their lowest levels since June 2023. Oil is bouncing off a key technical level (a Fibonacci level), which is forcing some buying activity. Traders are closing shorts, while others are optimistically buying the dip after oil prices fell 18% from July amid falling demand and rising output. Last week, hedge funds were the most bearish on oil in 13 years (**see below chart). But has max bearishness set in, as oil prices are now down 20% from this year's peak? There's a potential hurricane system approaching the US Gulf, so it seems buying in oil could pick up as it did today in the APAC region. But watching price action this week, is key. Will oil will drive lower or move higher
Last week, hedge funds were the most bearish on oil in 13 years
Australia will send its Treasurer to China for the first time since 2017. Jim Chalmers visits China in the final week of September, marking the first trip by an AU Treasurer in seven years. Chalmers is keen to strengthen areas such as critical minerals, critical infrastructure, and critical data, while also discussing trade restrictions. This week, America's largest clean energy conference kicks off in California. This and Australia's visit to China, puts the spotlight on metals needed for batteries and other clean (net zero) energy generators, such as solar, wind, and uranium. The global market for energy storage systems is expected to nearly double by the end of this decade. * (see below chart)
The global market for energy storage systems is expected to nearly double by the end of this decade.
Eyes are on stocks to be added the S&P/ASX 200 and also removed ahead of the quarterly rebalance taking place and effective Monday, September 23. Guzman y YGomez $Guzman y Gomez Ltd (GYG.AU)$, Westgold $Westgold Resources Ltd (WGX.AU)$, Yancoal $Yancoal Australia Ltd (YAL.AU)$ will be added. While Domain $Domain Holdings Australia Ltd (DHG.AU)$, Strike Energy $Strike Energy Ltd (STX.AU)$, and Nanosonics $Nanosonics Ltd (NAN.AU)$ will be removed. If that's not a sign of the times—with a gold stock being added to the index and oil name being removed—I don't know what is. Remember, gold traditionally rallies after a Fed rate cut, with gold prices jumping 35% the last time the Fed cut rates in August 2019, while oil is suffering from falling demand, with energy demands needs increasingly being met by cleaner energy in China (solar and wind) while rising oil output has pressured oil prices down.
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151453268 witso : Seems like a lot of pricing in of potential future developments, Westgold as you mentioned its ascent to the SP Asx200 is a canary in the coal mine for west Aussie gold investors, it doesn’t get more real than these guys plugging away in the Murchison region will watch and up the ante if need be.
