ASX bulls paw the ground as Wall Street rebounds

October 30, 2020 - 1 month ago
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Wall Street bounced back a day after displaying its biggest rout in four months and closed to modest gains on Thursday, with the U.S. technology advancing ahead of major earnings reports along with encouraging better-than-forecast economic data even as they kept a wary eye on growing coronavirus infections.

The rebound came after a more than +3% slide a day earlier in Wall Street’s main indexes, underscoring heightened market volatility ahead of the presidential election next week and growing fears of another COVID-19 slowdown.

Meanwhile, the number of first-time unemployment-benefits filers declined for a second straight week and hit its lowest level since March.

Initial weekly U.S. jobless claims came in at 751,000 for the week ending Oct. 24, better than the forecast estimate of 778,000.

At the finishing bell, on the New York Stock Exchange (NYSE), the Standard & Poor’s 500 Index climbed +39.08 points or +1.19% to 3,310.11 and the Dow Jones Industrial Average closed +139.16 points higher, or +0.52%, at 26,659.11.

Meanwhile, the rich-tech Nasdaq Composite advanced +180.72 points, or +1.64% to 11,185.59.

Shares of Amazon and Apple rose +1.5% and +3.7%, respectively, while Alphabet closed +3.1% higher and Facebook popped nearly +5%.

The ASX futures, meanwhile, rose +40 point or +0.7% to 5,976 while our local currency, the Australian dollar is currently buying US$0.7045 (as of writing).

Viewing the technical standpoint, the Relative Strength Index (RSI) 3-day ‘lookback’ remains deep in ‘oversold’ territory, which in terms warrants a rebound as the decline heads towards 5,935.

Meanwhile, the Moving Average Convergence Divergence (MACD) maintains a negative signal since breaking beneath the 0.00 axis.

The (MACD) technical indicator is a tool that is used to identify moving averages that are indicating a new trend, whether it is 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.

Support is considered 5,935, with 5,870 viewed beneath, with the minor resistance is located at 6,015, with the short-term cap at 6,060-65.

Daily outlook on the benchmark S&P/ASX 200

Having started the Thursday session on shaky territory, the Australian share market sunk deeper in the red for sixth (bearish Japanese Candlestick) out of eight consecutive days, since the rejection of 6,248.

The ASX 200 posted yet another fresh three-week low of 5,940 on Thursday amid concerns over the latest increase in COVID-19 cases and its potential impact on the global economy.

It was a pool of red across all 11 market sectors on Thursday, with just 20 of our top 200 stocks gaining any sort of ground.

At the closing bell, the benchmark S&P/ASX 200 Index fell -97.4 points or -1.61% to 5,960.30 at the close of the day, while the broader All Ordinaries sank -93.8 points or -1.5% to 6,168 points.

Energy prices took further casualties after U.S. crude oil plummeted further losing -5% on Wednesday with Woodside falling -2.2% to $17.33, Santos ended -4.99% lower to $4.76, Origin Energy dropped -4.29% to $4.02, and Oil Search lost -5.1% to close at $2.60.

Local travel stocks were also hit with Corporate Travel Management shares closing -5.4% lower to $15.15, Webjet fell -4.5% to $3.65, and Qantas lost altitude and fell -1.8% to close at $4.35.

The Financial sector weighed on the index with Australia and New Zealand Banking Group leading the “Fab Four” (banks) lower after full-year results from revealed a 42% drop in cash profit.

After sinking -2.4%, ANZ settled at $18.70, while Westpac Banking Corp Bank lost -1.97% to $17.95, meanwhile, National Australia Bank fell -1.48% to $18.60, Commonwealth Bank sank -0.45% to $68.14, and Macquarie Group lost -2.82% to $127.84.

Supermarket Coles shined after rallying +1.6% to close at $17.96, while its offsider Woolworth slipped -0.69% to $38.80.

The mining heavyweights ended weaker with titans BHP Group leading the decline by -2.19% to $34.01, with Rio Tinto falling -1.07% to $90.96 and S32 dropped -3.3% to $2.05.

Fortescue Metal Group, meanwhile, closed higher after a strong quarterly report that featured production and cost figures better than had been expected by the market with its share price, adding +0.85% to $16.62.

Jumbo Interactive rose +1.7% to $11.58 after telling investors that it had increased its total transaction value margin through the September quarter.

A trading update from JB Hi-Fi was not well received by investors as the retailer’s share price dropped -6.2% to close at $47.38 despite a performance update for the September quarter released ahead of its annual general meeting on Thursday confirming the surge in sales for the period.

Seek was in the spotlight after U.S. activist short-seller Blue Orca accused its Chinese business Zhaopin of false job listings.

Seek shares recovered from a fall of as much as -10.7% to end down -5.9% to $21.51 when the stock was suspended from trade pending an announcement.

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