The Australian share market is expected to edge higher on Thursday, with the recent all-time highs of February 2020 now a stone’s throw (away) at 7,197.20.
The ASX futures were up +36 points or +0.5% to 6,935, with our local currency, the Australian dollar is currently buying US$0.7608 (as of writing).
Meanwhile, U.S. stocks struggled for direction on Wednesday and closed nearly unchanged, after the release of minutes from the U.S. Federal Reserve’s March policy most recent meeting that reinforced the U.S. central bank’s position to remain patient before raising rates.
The gains were minor and short-lived on Wall Street as many market participants question whether the Fed will hold off so long on a rate hike.
Despite an improving U.S. economy and labour market, Fed officials said they expect it will be “some time” before any tapering of the central bank’s monthly asset purchases program takes place, or before benchmark interest rates are lifted from today’s near-zero levels, according to Fed minutes.
The U.S. Federal Reserve data released also indicated that the U.S. consumer borrowing also picked up in February and households started to use their credit cards again.
The yield on the benchmark 10-year U.S. Treasury note moved higher late in the session yet remained below a 14-month high of 1.776% hit on March 30, after settling on Wednesday at 1.67%.
The recent pullback in yields has helped growth names and lifted technology and communication services stocks as the best performing sectors on the day.
At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial rose +16.02 points, or +0.05%, to 33,446.26, its second-highest finish ever.
The broad-based Standard & Poor’s 500 Index eked out a +6.01 points, or 0.15% gain, to 4,079.95, while the rich-tech Nasdaq Composite dropped -9.54 points, or -0.07%, to 13,688.84, booking its second day in a row of losses.
Viewing the technical standpoint for the S&P/ASX 200 (XJO), the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is heading into overbought territory, while the Moving Average Convergence Divergence (MACD) positive signal has strengthened along with the RSI indicator.
The Average Directional Movement Index (ADX) trend indicator has restored the 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 challenge now awaits the resistance of 6,940 level, which may extend to 6,980.
Reassess from there, as the February 2020 all-time highs are viewed above at 7,197.20.
The support located at 6,870-75. Reassess from there.
Daily outlook on the benchmark S&P/ASX 200
The Australian sharemarket climb continues and posts its fourth consecutive bullish day, as prices head back to February highs of 6,938, with the all-time high above 7,197.20 (posted 20th February 2020).
At the closing bell, the benchmark S&P/ASX 200 index rose +42.1 points, or +0.61%, to 6,928.0, while the All Ordinaries advanced +43.5 points, or +0.61%, to 7,177.4 – not far from its record high of 7289.7.
All sectors ended in the green, with Energy booking a +1.44% gain, with Woodside Petroleum rising +1.12%, to $24.39, while Oil Search rose +1.73%, to $4.12, Origin Energy added +2.37%, to $4.75, Santos gained +2.29%, to $7.16, and Worley ended to a +0.74% gain of $10.91.
Telstra finished -0.29% lower at $3.39, while Woolworths rose +0.8%, to $41.34, Wesfarmers added +0.34%, to $53.53, QBE Insurance lost -0.51%, to $9.72, and Aristocrat Leisure rose +1.79%, to $35.85.
The Financial sector was firmer, with Commonwealth Bank leading the “Fab Four” (banks) higher by +0.58%, to $86.53, while Westpac Banking Corp added +0.57%, to $24.84, National Australia Bank added +0.42%, to $26.34, Australia and New Zealand Banking Group gained +0.32%, to $28.44, and Macquarie Group fell -0.32% and settled at $151.69.
Materials closed was mixed as Rio Tinto Limited lifted the titans higher after climbing +1.18% to $113.44, while BHP Group eked out a +0.07% gain, to $45.88, while Fortescue Metals Group fell -0.24% to $20.48.
With Newcrest Mining adding +1.29%, gold miners were firmer to $25.91, Northern Star Resources rose +4.21%, to $10.65, and Evolution Mining Ltd added +1.86%, to $4.38.
Buy-now-pay-later giant Afterpay put on +2.1%, to $118.48, accounting software provider Xero added +0.57%, $135.77, and EML Payments jumped +5.45%, to $5.42 after announcing it had inked a deal to buy European fintech enabler Sentinel.
Lithium miner Pilbara Minerals surged +6.36%, to $1.17 in the wake of US President Joe Biden’s announcement last week of a record $US176bn investment to create a nationwide electric vehicle charging network by 2030.
Among travel stocks, Flight Centre added +1.45%, to $18.94, Corporate Travel Management rose +0.94%, to $19.42 and Webjet gained +1.09%, to $5.59.
Qantas stock jumped +2.7%, to close at $5.40 on news that New Zealand and Australia will launch a trans-Tasman travel bubble.
Real estate shares posted a strong session, adding +1.3%, with Charter Hall rising +3.3%, to $13.23, and Lendlease rose +2.7%, to $13.37.