ASX Set To Edge Lower After A Savage Night – Eight Highlights

With Wall Street gaining back from an early fall to finish sharply higher, global markets were hit with more volatility overnight.

As at October 30, 2018, ASX200 update– On the back of reports from Bloomberg the stubborn beginnings came now, well known, if a deal couldn’t be achieved between Chinese President Xi Jinping and the US President Donald Trump at next month’s G20 Summit, that the Trump Administration would be seeking to put tariffs on all Chinese imports into the US.

Asian Trade Sentiment – Though on volumes slightly below last week’s average, breadth on the ASX200 was at a notable 75 percent with the major momentum/growth sectors topping the sectoral map. The Big 4 financials did most of the heavy lifting adding 30 points to the index. Establishing the foundations for a challenge of resistance levels between 5780 and 5880 the Australian market has now pulled itself out of oversold levels, to break-trend on the RSI. 

Corrective bias remains – The simple price action on the ASX200 index doesn’t yet indicate an end to the recent bearish streak, putting aside the major global drivers for equity markets the world over. The technical indicators play into it, at least as it currently presents. A hold above 5780 would be a definite sign required and break through 5930 before this can be specified.

Drivers of ASX200 – A slew of mining companies, oligopoly of banks, a couple of supermarkets and a much-loved biotechnology firm determines the overall activity. As investors ignore the regulatory problems banks went up this week, while miner is being affected by concerns on global growth about the impacts of tariffs.

Market trends – The US Federal Reserve increase US interest rates at a slower pace and to soften its hawkishness which can lead to reversal as forced by a belief amongst investors of the recent share market volatility. With the yield on the rate-sensitive US Treasury note falling to as low as 2.81 percent this week from +2.90 percent, US Treasury markets reflect this.

Europe and America – Following a late session run on Wall Street that has seen the Dow Jones climb 1.86 percent, futures markets have pared losses late in US trade the NASDAQ jump 1.56 percent, the S&P500 rally 1.26 percent, all this followed-on from a soft day in European shares which was followed by mixed economic data releases across the Eurozone news of potential along with ratings downgrade of UK debt by S&P.

CPI data of Australia – RBA’s inflation target band of 2-3 percent is not reachable with price growth 0.5 percent number and affirm the central bank’s soft inflation outlook and dovish rate bias. Australian Dollar and interest rate markets could shift with extreme variance to either side of market consensus.

Market watch – SPI futures was down 10 points or 0.2% to 5762, while Dow was up +1.8% with S&P 500 +1.6% and Nasdaq +1.6%, AUD +0.7% reached to 71.07 US cents. Spot gold -0.5% to $US1222.98 an ounce. Brent crude changed -2.2% to $US75.64 a barrel, US oil fell -1.5% to $US66.03 a barrel. LME aluminum dropped -0.8% to $US1967 a ton, LME copper -2.1% to $US6032 a ton. US-Australia 10-year yield gap at 53 basis points.


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