• Rates and technology stocks are stable at the opening.
  • Currencies and commodities are following suit.
  • Bank and resource stocks are lower at the open, anticipating systemic risk transmitting to the souring of credit portfolios and lower raw material demand.

In the rear-view

We’ve barely started the year, and the realities of 2022 are already beginning to turn on their head. Rates and their complementary tech stock valuations are stable, yet banks and resource companies are down at the open.

The dominant themes of 2022 in the financial markets were high inflation and counterpoint rising interest rates with a resultant stifling of tech sector valuations and thriving resource companies.

Financial firms ticked along nicely as unemployment remained low and interest rate margins improved.

Looking glass of 2023

In the opening of 2023, the stock market started the year pricing in wider systemic risk and weaker demand.

Westpac Banking Corp ASX:WBC (WBC) fell 51c or 2% on the first official day of trading for 2023, and the Commonwealth Bank of Australia dropped 1.7% to follow suit. Rates and currencies were relatively stable. It was the risk to credit portfolios and near-term demand in the spotlight.


Top Australian Brokers


As gas prices in Europe and the UK crater over warm weather and adequate supply, coal stocks are opening the year down. Whitehaven Coal Ltd ASX:WHC (WHC) is in the red by 7.6%, New Hope Corp Ltd ASX:NHC (NHC) is down by 8.5%.

Outside of dipping European gas markets, commodities overall were relatively stable. Oil was marginally higher, with gold ticking up by over 1%.

The weakness in resource companies is due to the stock market pricing in additional demand reduction. For similar reasons, the banks are lowering their macroeconomic outlook and subsequent valuations.

Macroeconomic weakness

Many factors can contribute to macroeconomic weakness, even when unemployment is low. Some of the potential reasons for this situation could include the following:

  • Slow growth in GDP: If the overall economy is growing slowly, it can be a sign of weakness, even if unemployment is low.
  • Inflation that is too high or too low: If inflation is too high, it can erode the purchasing power of consumers and businesses, leading to slower economic growth.
  • High levels of debt: If households, businesses, and/or governments carry high levels of debt, it can drag on economic growth.
  • Structural problems in the economy: There may be underlying economic issues restricting growth, such as a lack of investment in infrastructure or education or competition in certain markets.
  • Geopolitical tensions: Uncertainty and instability caused by geopolitical tensions can also weigh on the economy, making businesses and consumers more hesitant to spend and invest.


Despite the continued low unemployment and a basket of resource prices for immediate delivery holding their own, the stock market is starting to fear the worst.

This type of groupthink across asset classes often offers opportunities to the investor as the potential for individual mispricing increases.