The Australian share market is expected to edge higher on Friday, with the recent all-time highs of February 2020 now a stone’s throw (away) at 7,197.20.
The ASX futures were up +15 points or +0.2% to 7,051, with our local currency, the Australian dollar is currently buying US$0.7734 (as of writing).
The blue-chip Dow and S&P 500 index closed at records on Thursday after key companies in the U.S. reported strong earnings and new economic data, which points to a rebound in consumer spending and the U.S. jobs market.
At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial rose +305.10 points, or +0.90%, to a record close of 34,035.99, setting a new closing record and an intraday all-time high earlier in the session.
The broad-based Standard & Poor’s 500 Index gained +45.76% points, or +1.1%, to 4,170.42, also reaching a record high.
Meanwhile, the rich-tech Nasdaq Composite Index advanced +180.92 points, or +1.3% to 14,038.76.
Technology shares rebounded as bond yields declined, while the so-called FAANG stocks – Facebook, Amazon, Apple, Netflix and Alphabet – all climbed more than +1%.
The 10-year Treasury yield slipped 8 basis points below 1.56%.
Meanwhile, US retail sales surged 9.8% in March as additional stimulus sent consumer spending soaring, the Commerce Department reported on Thursday, crashing through the 5.8% forecast.
Adding to the market’s optimism, weekly U.S. jobless benefits claims fell to the lowest level since March 2020.
The U.S. unemployment claims sank by 193,000 in the week of April 10.
Initial jobless claims filed traditionally through the states declined to a seasonally adjusted 576,000 from 769,000 in the prior week.
Viewing the technical standpoint for the S&P/ASX 200 (XJO), the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator has negated the bearish divergence; however, it is overbought.
Meanwhile, the Moving Average Convergence Divergence (MACD) positive signal holds.
The Average Directional Movement Index (ADX) trend indicator holds to a bullish bias (signal).
Developed by J. Welles Wilder, the Relative Strength Index (RSI) is an extremely popular momentum indicator (oscillator) that measures price movements’ speed and change.
RSI oscillates between zero and 100.
According to Wilder (depending on the period setting), the RSI is considered overbought when above 70 and oversold when below 30.
Signals can also be generated by looking for divergences, failure swings and centreline crossovers.
RSI can also be used to identify the general trend.
Gerald Appel developed the (MACD) technical indicator back in 1979, while in 1986, Thomas Aspray added the histogram.
The MACD is a tool used to identify moving averages that indicate a new trend, whether bullish or bearish.
(MACD) plots the distance between moving averages and helps traders identify trend direction and whether the bullish or bearish momentum in the price is strengthening or weakening.
Viewing the (XJO) technical aspects, the resistance is located at 7,090-95.
Reassess from there, as the February 2020 all-time high is viewed at 7,197.20.
The support is located at 7,015 minor, with 6,960-65 is located beneath. Reassess from there.
Daily outlook on the benchmark S&P/ASX 200
It was a bullish tale on Thursday, as the Australian sharemarket stepped closer to February 2020 at a 7,197.20-record high.
Now within a stone’s throw of reclaiming its record high, the ASX managed to advance to the post-pandemic high on Thursday as strong gains from the miners helped push the market closer to last year’s record.
At the closing bell, the benchmark S&P/ASX 200 index rose +35.5 points, or +0.51%, to 7,058.6.
The broad All Ordinaries index added +36.9 points, or +0.51%, to 7,317.5 and cruised through the all-time peak of 7,289.7 set on 17 February 2020.
Overnight, U.S. Federal Reserve Chair Jerome Powell on Wednesday said the central bank will reduce its bond purchases likely well before it hikes interest rates.
“We will reach the time at which we will taper asset purchases when we have made substantial further progress towards our goals from last December,” Powell said to the Economic Club of Washington.
“That would in all likelihood be before, well before, the time we would consider raising interest rates. We have not voted on that order, but that is the sense of the guidance.”
Meanwhile, good news emerged after the Australian Bureau of Statistics reported the national economy created 70,700 new jobs in March, pushing the jobless rate lower to 5.6% from February’s 5.8%, with the forecast crushed at 5.7%.
Full time employment -20.8k s/adj, while participation rate +66.3 pct, s/adj.
Materials climbed +1.83%, with Fortescue Metals Group lifting the titans higher after rallying +3.51% to $20.95, while Rio Tinto Limited rose +2.96% to $117.71 and BHP Group added +2.87%, to $47.33.
Gold miners once again lost their shine, with Newcrest Mining falling -1.25%, to $26.85, Northern Star Resources lost -3.37%, to $10.89, and Evolution Mining Ltd dropped -5.56%, to $4.42.
As for our oil and gas producers, Woodside Petroleum rose +0.79% to $24.35, while Oil Search rose +1.25% to $4.05, Origin Energy rose +0.21%, to $4.70, Santos added +2.28%, to $7.18, and Worley climbed +1.32% to $10.75.
Telstra tumbled -1.15%, to $3.43, while Woolworths rose +1.23%, to $42.01, Wesfarmers added +0.16%, to $55.16, QBE Insurance rose +1.43%, to $9.91, and Aristocrat Leisure climbed +1.2%, to $37.17.
The Financial sector was firmer with Westpac Banking Corp leading the “Fab Four” (banks) higher by +0.67%, to $25.50, while National Australia Bank ended up +0.67%, to $25.50, Commonwealth Bank added +0.13%, to $87.91, while Australia and New Zealand Banking Group rose +0.1%, to $28.92 and Macquarie Group rose +1.64% and settled at $157.85.
Travel and tourism companies rose with Helloworld climbed +3.47%, to $2.09, Corporate Travel Management added +0.95%, to $19.09, Webjet rose +2.13%, to $5.28, Flight Centre eked +0.06%, to $17.77 and Qantas lost -0.19% to $5.20.
Real estate shares were weaker, with Charter Hall falling -0.89%, to $13.37, Lendlease added +0.38%, to $13.30, and Goodman Group ended flat at $18.65.
Biotechnology giant CSL gained +0.18%, to $268.29, while ResMed lost -0.81%, to $26.83, Fisher & Paykel Healthcare fell -0.87%, to $30.60, while Cochlear lost -0.1%, to $223.97 and Mesoblast added +0.88%, to $2.30.