The Australian sharemarket is set to inch higher at the open on Tuesday, with the ASX futures at the New York close pointing to a gain of +11 points, or +0.2% to 7,015, while our local currency, the Australian dollar, is currently buying US$0.7758 (as of writing).
The ASX 200 and the Australian Dollar will be in focus today as the (May) Reserve Bank of Australia (RBA) interest rate decision that expects the RBA to keep the cash rate and other key measures at a record low 0.1%.
At present, it is widely expected there will be little chance the central bank will change course on its interest rate outlook in light of last week’s inflation figures, which showed price pressures remain extremely subdued.
The central bank has repeatedly said it has no intention of lifting interest rates until inflation is sustainably within the 2% to 3%e target band.
The statement will be closely scrutinised to see if the tone holds to a hawkish or dovish bias.
U.S. stocks were mixed after the close on Monday, as gains in the S&P 500 and the Dow indexes were offset by Tesla Inc. and Amazon.com Inc., which weighed on the Nasdaq Composite index.
At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average climbed +238.38 points, or +0.70%, to 34,113.23.
The broad-based Standard & Poor’s 500 Index rose +11.49 points, or +0.27%, to 4,192.66, while the rich-tech Nasdaq Composite Index dropped -67.56 points, or -0.48%, to 13,895.12.
Tesla fell -3.46%, after industry news sources reported the electric-vehicle maker, under scrutiny in China over safety and customer service complaints, is boosting its engagement with mainland regulators and beefing up its government relations team.
Meanwhile, Amazon slipped -2.33%, Facebook tumbled -0.77%, while Apple added +0.8%.
This Friday, traders will focus on the jobs report from the U.S., which will provide insights into the state of recovery of the labour market.
The Non-Farm Employment Change forecast is seen for a rise of 975,000, with the previous release at 916,000, while the Unemployment Rate forecast at 5.7%, with the last release at 6.0%.
Viewing the S&P/ASX 200 (XJO) technical aspects, the daily technical set-up remains mixed since last week’s volatile session.
The Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is attempting to regain momentum as it rechallenges the 50-midway point, while the Moving Average Convergence Divergence (MACD) holds a negative signal as it holds under the 0.00 axis line.
The Average Directional Movement Index (ADX) trend indicator no longer holds to bullish bias (signal) – Now ranging.
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.
The immediate resistance is 7,065 minor, with the February 2020 all-time high viewed at 7,197.20. Reassess from there.
The support is located at 6,990-95, with 6,935-45 situated beneath. Reassess from there.
Daily outlook on the benchmark S&P/ASX 200
On Monday, the Australian stock market looked for direction to the new week, new month, leaving investors to question whether to “sell in May and go away.”
This adage dictates that from now to October is often a less profitable and more bumpy time for stocks.
It is assessed, investors could convert to cash at the start of May and then buy into a dip later in the fall.
“With stocks at record highs, some investors may be tempted to follow the old adage.”
At the closing bell, the benchmark S&P/ASX 200 index eked out a +3 points gain, or +0.04%, to 7,028.8, while the broad All Ordinaries index slid -3.9 points, or -0.05%, to 7,286.8.
The Financials, Telecommunication and Real Estates sectors offset the other eight negative sectors with Information Technology, Energy and Materials all losing over -1%.
Materials ended back in negative territory, with BHP Group leading the titans lower after losing -1.4%, to $47.03, while Rio Tinto fell -0.87% to $120.09, and Fortescue Metals Group dropped -0.49%, to $22.48.
Smaller miners also fell, with Nickel Mines falling -2.19%, to $1.115, Lynas Rare Earths advanced +0.73%, to $5.54 and Mineral Resources closed -0.31%, lower to $47.60.
Gold stocks were weaker, with Newcrest Mining falling -0.94% to $26.27, Northern Star Resources tumbled -0.29% to $10.48, and Evolution Mining Ltd dropped -1.08% to $4.58.
The Financial sector was stronger, with Westpac Banking Corp leading the “Fab Four” (banks) after climbing +5%, to $26.23.
Meanwhile, Commonwealth Bank ended up +0.74%, to $89.70, with the National Australia Bank adding +2.14%, to $27.23, Australia and New Zealand Banking Group gained +1.25%, to $29.10 and Macquarie Group slipped -0.19% and settled at $160.19.
Supermarket giants Coles and Woolworths were among the consumer staples stocks to ease lower with Coles falling -0.31%, to $16.27, and its rival Woolworths fell -0.76%, to $39.00.
E-commerce group Kogan ended higher after climbing +2.8% to $11.39, Seek dropped -1.28% to $30.97.
Meanwhile, JB Hi-Fi slid -0.11% lower at $46.23, while Telstra added 2.95% to $3.49, while Wesfarmers lost -0.61%, to $53.78, QBE Insurance added +1.32%, to $9.99, and Aristocrat Leisure rose +0.46%, to $37.34.
Biotechnology giant CSL lost -0.08%, to $270.95, while ResMed fell -4.43%, to $25.01, Fisher & Paykel Healthcare dropped -2.14%, to $32.91, while Cochlear slid -0.43%, to $221.55 and Mesoblast plummeted -4.35%, to $1.87.
In technology, Buy-now-pay-later giant Afterpay fell -3.1%, to $114.00, accounting software provider Xero tumbled -1.14%, to $139.95, Altium lost -3.85%, to $28.59, Megaport tumbled -0.56%, to $14.30, NEXTDC sank -0.17%, to $11.57, EML rose +0.7%, to $5.75 and Zip Co plummeted -3.1%, to $7.81.
As for our oil and gas producers, Woodside Petroleum dropped -1.49% to $22.52, while Oil Search ended down -1.59%, to $3.74, Santos lost -2.29%, to $6.82, Worley finished at a -2.58% loss of $10.58, and Beach Energy ended flat at $1.275.
Travel stocks we weaker with Sydney Airport lost -0.65%, to $6.15, Corporate Travel Management lost -3.19%, to $17.92, Flight Centre added +1.01%, to $16.92 and Webjet fell -0.4% to $4.98.