The Australian share market is poised to edge higher, although the ride could be bumpy at the beginning of the week.
The ASX futures eked out a +6 points rise, or +0.1% to 6,980 on Friday, with our local currency, the Australian dollar is currently buying US$0.7606 (as of writing).
The broad-based Standard & Poor’s 500 Index and the blue-chip Dow Jones Industrial rose on Friday to close at record highs, posting a third consecutive weekly rise partly on a lift from growth stocks and rising reopening optimism.
At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial rose +57.31 points, or +0.17%, to 33,446.26, notching a record closing high.
The broad-based Standard & Poor’s 500 Index gained +31.63 points, or +0.77%, to 4,128.8, hitting its third straight record close.
Meanwhile, the rich-tech Nasdaq Composite added +70.88 points, or +0.51%, to 13,900.19.
Growth names have booked positive gains over the past two weeks after being outperformed by value stocks for most of the year.
A pullback in the 10-year U.S. Treasury yield from a 14-month high hit in late March inspired buying in growth.
The blue-chip Dow climbed +2% last week, while the S&P 500 gained about +2.7%, posting its best week since early February.
The Nasdaq rallied +3.1% over the same period as major technology names outperformed.
Apple jumped more than +8% this week, while Amazon and Alphabet both gained more than +6%, respectively.
On the data front, the U.S. producer price index, which measures wholesale price inflation, jumped in March.
The March PPI data showed a rise of +1.0%, compared with the forecast of an increase of 0.4%.
The PPI surged +4.2% year over year, which marks the largest annual gain in 9-1/2 years.
U.S. first-quarter results start later this week, while investors will be monitored the RBNZ rate decision, which is scheduled this Wednesday.
Then on Thursday, we get an update of the Australia March jobs data with the forecast at 5.7%, with the previous month’s release at 5.8%.
Elsewhere, in a T.V. interview, U.S. Federal Reserve Chair Jerome Powell said the U.S. economy is at an “inflection point” and that growth and job creation is poised to accelerate.
“What we’re seeing now is really an economy that seems to be much at an inflection point,” adding, “and that’s because of widespread vaccination and strong fiscal support, strong monetary policy support. We feel like we’re at a place where the economy’s about to start growing much more quickly, and job creation coming in much more quickly. The outlook has brightened substantially. But that’s only if there isn’t another wave of Covid-19.”
“The principal risk to our economy right now really is that the disease would spread again. It’s going to be smart if people can continue to socially distance and wear masks,” Powell said.
More than 183 million vaccines have been administered in the United States, according to the Centre for the Disease and Control and Prevention (CDC) data.
Viewing the technical standpoint for the S&P/ASX 200 (XJO), the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is currently in retreat from the overbought territory, while 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 near-term cap is located at 7,045.
Reassess from there, as the February 2020 all-time highs are viewed above at 7,197.20.
The support is located at 6,910-15. Reassess from there.
Daily outlook on the benchmark S&P/ASX 200
The bulls were smiling after booking their third weekly gains over four weeks, even though the market slipped from the 7,000 handle on Friday.
At the closing bell, the benchmark S&P/ASX 200 index slid -3.6 points, or +0.05%, to 6,995.2, while the All Ordinaries eked out +2 points, or +0.03%, to 7,252.3, and remains within arm’s reach of its all-time peak of 7289.7 points.
The benchmark index had hit a fresh 13-month just yesterday as it breached 7,000 for the first time since 24 February last year.
A sharp rally in local technology stocks on Tuesday helped the market to a strong start from the Easter long weekend break.
The Reserve Bank of Australia (RBA) left its easy policy settings on hold at the April meeting last Tuesday and reiterated that monetary conditions would remain highly supportive.
By Wednesday’s closing bell, the Australian market was at a 13-month high.
However, the bullish momentum subsided on Thursday after Prime Minister Scott Morrison put the AstraZeneca vaccine on ice for Australians under 50, linked to rare but potentially fatal blood clots.
Meanwhile, on Friday, Mr Morrison said a further 20 million Pfizer vaccines were secured and would arrive in Australia by December 31.
The ASX 200 sectors were mixed to the close on Friday, with Information Technology rising +0.72 while Staples fell -1.10%.
Materials slipped into the red, with BHP Group dragging the titans lower after falling -0.83% to $46.67, while Fortescue Metals Group dropped -0.52% to $20.89 and Rio Tinto Limited lost -0.33%, to $115.50.
Gold miners continued to shine, with Newcrest Mining adding +1.06%, to $26.70, Northern Star Resources rose +1.11%, to $10.90, and Evolution Mining Ltd added +2.46%, to $4.59.
As for our oil and gas producers, Woodside Petroleum lost -0.57%, to $24.32, while Oil Search fell -0.48%, to $4.11, Origin Energy dropped -0.63%, to $4.74, Santos lost -0.98%, to $7.07, and Worley ended to a -1.4% loss of $10.60.
Telstra finished flat at $3.43, while Woolworths lost -1.27%, to $41.23, Wesfarmers added +0.48%, to $54.17, QBE Insurance lost -1.51%, to $9.78, and Aristocrat Leisure rose +0.27%, to $36.79.
The Financial sector was mixed, with National Australia Bank leading the “Fab Four” (banks) higher by +0.34%, to $26.72, while Westpac Banking Corp added +0.2%, to $25.21, Australia and New Zealand Banking Group ended flat at $28.74, Commonwealth Bank eked out a +0.01%, to $87.13 and Macquarie Group rose +0.77% and settled at $154.80.
Buy-now-pay-later giant Afterpay climbed +1.22%, to $121.47, accounting software provider Xero added +1.51%, $138.90, and EML Payments added +0.35% and settled at $5.75.
Travel and tourism companies fell as potential delays to Australia’s vaccination program cast a shadow over with Helloworld dropping -2.29%, to $2.13, Corporate Travel Management -2.95%, to $18.77, Webjet fell -2.53%, to $5.40, and Flight Centre tumbled -2.7%, to $18.42.
Qantas edged up +0.55% to $5.45, and Air New Zealand’s ASX-traded shares added +2.1% to $1.69.
Real estate shares remained firm, with Charter Hall rising +1.28%, to $13.47, Lendlease rose +0.22%, to $13.38, and Goodman Group added +1.57% to $18.79.
Healthcare sector fell -0.82%, with Biotechnology giant CSL falling -0.96%, to $263.40, while ResMed fell -0.05%, to $25.97, Fisher & Paykel Healthcare ended eking out +0.05%, to $30.96, while Cochlear fell -0.95%, to $216.52 and Mesoblast slid -0.04%, to $2.23.