Australian shares are poised to open lower, as steep losses in U.S. technology shares dragged down the broad-based Standard & Poor’s 500 and rich-tech Nasdaq Composite index lower as climbing Treasury yields and prospects of rising inflation concerns linger.
The ASX futures ended down -13 points, or -0.2%, 6,700, with our local currency, the Australian dollar is currently buying US$0.7914 (as of writing).
On today’s reporting season schedule are Accent Group (AX1), Adelaide Brighton (ABC), APA Group (ALD), Alumina (AWC), Estia Health (EHE), Hub 24 (HUB), Oil Search (OSH), Spark Infrastructure (SKI), Technology One (TNE), G8 Education (GEM), Worley (WOR), Monadelphous (MND).
Meanwhile, bitcoin tumbled -17% to an intraday low of $48,353.8 before bouncing back this morning.
This follows volatile trading yesterday, which saw the cryptocurrency claw to a fresh high of $58,335.0.
At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average finished the day higher after eking out +27.37 points, or +0.09%, to 31,521.69.
The broad-based Standard & Poor’s 500 Index closed lower for the fifth straight session, after slipping -30.21 points, or -0.77%, at 3,876.50, amid the weakness in tech and consumer discretionary.
The rich-tech Nasdaq Composite index fell -341.42 points, or -2.46% to 13,533.05.
Shares of Apple Inc, Microsoft Corp, Alphabet Inc, and Amazon.com Inc resumed their slide from the previous week, falling between -0.9% and -5%, while Tesla fell -8.5% on the day.
U.S. airline stocks rebounded after Deutsche Bank upgraded several names in the industry to a buy rating. American Airlines jumped more than +9% on Monday.
Monday’s losses pared the Nasdaq’s February gains to +3.5%, with the S&P 500 rising +4.4% this month, while the Dow has gained +5.1%.
The 10-year Treasury yield rose again on Monday to around 1.35% after jumping 14 basis points last week to its highest level since February 2020.
So far this month, the benchmark rate has moved up 27 basis points. The 30-year yield touched a one-year high of 2.2% Monday. A basis point is 0.01%.
Looking forward, all eyes will be on U.S. Federal Reserve Chairman Jerome Powell, who delivers his semi-annual testimony on the economy before the Senate Banking Committee on Tuesday.
His comments on rates and inflation could determine the market direction for the week.
Viewing the technical standpoint for the S&P/ASX 200 (XJO), the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator has moved lower and is heading into oversold territory, while the Moving Average Convergence Divergence (MACD) is married up to the RSI negative signal since breaking beneath the 0.00 axis.
The Average Directional Movement Index (ADX) trend indicator is sideways (trendless).
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 topside, the (XJO) resistance is seen minor at 6,825 with 6,895-00 viewed above.
The support is assessed from 6,770-75. Reassess from there, as a break would expose the region of 6,710-25.
Daily outlook on the benchmark S&P/ASX 200
The Australian sharemarket picked up from Friday’s decline and posted its fourth bearish session after Friday’s lacklustre session on Wall Street.
At the closing bell, the benchmark S&P/ASX 200 index rose to -12.9 points, or -0.19%, lower to 6,780.9, while the All Ordinaries slid to -2.4 points, or -0.03%, to 7,061.6.
Materials were the only sector in positive territory after chalking up a healthy gain of +2.58%.
Going into overdrive, Rio Tinto leading the titans higher after advancing +3.63%, to $127.74, BHP Group rose +3.34%, to $48.90, while Fortescue Metals Group climbed +3.21%, to $24.74, South32 added +2.99%, to $2.76 and Mineral Resources surged +4.87%, to settle at $39.63.
Gold resources were firm, with Newcrest Mining climbing +0.54% to $24.37, Northern Star added +2.79%, to $10.67, and Evolution rallied +2.91%, to $4.25.
The Financials sector was deep in negative territory, with National Australia Bank leading the “Fab Four” banks lower, after falling -2.15%, to $24.57, Westpac Banking Corp dropped -1.54%, to $23.72, Commonwealth Bank lost -0.74%, to $81.90, while Australia and New Zealand Banking Group slipped -0.41%, to $26.50, and Macquarie Group rose +3.44% and settled at $147.15.
Buy now, pay later Afterpay fell -1.8%, and settled at $149.19, while Xero lost -1.01%, to $123.44, WiseTech Global declined -2.36%, to $30.56 and Zip Co Ltd added -0.24%, to $12.38.
Travel stocks were firmer with Webjet surging +8.92%, to $5.37, with Flight Centre rallying +7.15%, to $15.59, Qantas firmed +4.33%, to $4.82, Regional Express, meanwhile, slipped -3.68%, to $1.70 and Corporate Travel Management jumped +8.29%, to $18.94.
Healthcare was weaker, with Biotechnology giant CSL plunged -2.42%, to $267.79, while ResMed lost -2.21%, to $25.24, Cochlear fell -0.59%, to $220.38, Ramsay Health slid -0.02%, to $62.15 and Mesoblast ended flat at $2.60.
Wesfarmers finished -2.56%, lower to $52.63, while Woolworths saw its share price end the trading session weaker -1.01%, to $39.12 while its rival Coles Group lost -1.89%, to $16.10.