ASX to fall back to Friday’s levels – “Déjà Vu?”

July 14, 2020 - 3 weeks ago
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Buckle up, as the ASX opening may have that “Déjà Vu” feeling again, as traders are likely to have that feeling they have been here before.

In a volatile session, U.S. stocks on Wall Street closed mostly lower on Monday, with the Dow Jones just hanging on to session gains, as technology stocks tumbled as California’s Governor Gavin Newsom ordered state-wide closure of all indoor operations at restaurants, bars, movie theatres, zoos and museums, with other businesses like gyms and hair salons being required to close their doors in counties on the state’s watch list following a recent spike in coronavirus cases.

Florida had more new cases in one day than the entire U.S. did in about two months.

Florida reported its highest number of new COVID-19 cases in one day – 15,300 on Saturday, according to data from Johns Hopkins University.

That’s a new record for the latest cases in a single day from any state – including New York state earlier in the pandemic.

It took the entire United States 59 days to top 15,000 combined cases – from January 21 to March 20.

It also took the entire US more than two months from the start of the outbreak to top 15,000 new cases in a single day.

That happened on March 26, when the US had 18,036 new cases in a single day, according to Johns Hopkins data.

Meanwhile, the head of the World Health Organization has warned that the COVID-19 pandemic is worsening, and things will not return to “the old normal” for some time.

WHO director-general Tedros Adhanom Ghebreyesus told a press conference on Monday that “there will be no return to the old normal for the foreseeable future”.

Wall Street rallied earlier after traders reacted positively to more upbeat news regarding a potential coronavirus vaccine.

Besides the announcements from Companies Pfizer (PFE) and German biotech firm BioNTech (BNTX), U.S. biopharmaceutical company Gilead Sciences Inc’s said its coronavirus treatment candidate, Remdesivir, “was associated with an improvement in clinical recovery and a 62% reduction in the risk of mortality compared with standard of care.”

Meanwhile, if the ongoing studies are successful and the vaccine receives regulatory approval, Pfizer and BioNTech expect to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021.

After trading in positive territory for much of the day, the Standard and Poor 500 and Nasdaq Composite Index closed lower at the finishing bell, on the New York Stock Exchange (NYSE).

The rich-tech Nasdaq Composite Index plummeted -226.60 points, or -2.1%, to close at 10,390.84, after setting a new intraday record at the start of trading of 10,824.78.

The sharp pullback came as tech giants like Netflix, Amazon and Facebook showed substantial downturns after reaching new record intraday highs.

Shares of Tesla, the electric carmaker, had a particularly wild ride on Monday after surging more than +16% to a new all-time high of $1,794.99, before giving back those gains and falling into negative territory during afternoon trading and ended down -3.08% to $1,497.06.

The Standard and Poor 500 index fell -29.82 points or -0.94% to 3,155.22, while, the Dow Jones Industrial Average eked out a +10.50-point gain, or +0.04%, to end at 26,085.80.

The Australian Index Futures (SPI 200 futures contract) dropped -45 points or -0.8% to 5,892, while our local currency, the Australian dollar, is currently buying US$0.6940 (as of writing).

Elsewhere, investors have also been keeping an eye on threats of renewed U.S. and China tensions after President Donald Trump said on Friday that there was no scope for a phase-two agreement on trade between the two countries, saying Washington’s relationship with China had been “severely damaged” by the coronavirus pandemic, which the administration has sought to blame on Beijing.

China’s move to crack down on Hong Kong with the passage of strict new national security laws has also raised tensions.

Viewing the technical assessment for the benchmark S&P/ASX 200 index, the 3-day lookback RSI is mixed as it flirts with the 50-midway point, while the MACD remains flat as it idles around the 0.00 axis.

After the initial uptake on Monday, it is assessed the bears will be back today with the immediate support located from 5,880-90, with 5,700-25 viewed beneath.

The resistance is expected to remain as a short-term cap at 6,000-20, with 6,100-15 seen above.

Daily outlook on the benchmark S&P/ASX 200

On Monday, the Australian share market may have been feeling a “Déjà Vu” vibe after its repeated performance from a pattern all-too-familiar recently displayed a week or so ago.

Global markets were all revved up on Friday which overflowed into Monday’s session after positive analysis reports from U.S. biopharmaceutical company Gilead Sciences Inc’s after saying its coronavirus treatment candidate, Remdesivir, “was associated with an improvement in clinical recovery and a 62% reduction in the risk of mortality compared with standard of care.”

The drug maker’s shares rose +2.3% as it said the finding required confirmation in clinical trials.

BioNTech’s CEO said the company’s coronavirus vaccine candidate could be ready for approval by December.

Meanwhile, Florida reported 15,299 new coronavirus cases on Sunday, the highest single-day total for any U.S. state since the pandemic began.

The U.S. has reported more than 60,000 new cases daily for three days in a row now, bringing the national total to more than 3 million cases, according to data from Johns Hopkins University.

On Monday, Victoria reported +177 new cases while NSW reported 14.

Healthcare stocks were somewhat muted with biotech space, as fastest-growing protein-based biotechnology CSL ended the day lower by -0.33% to $281.43, while Avita Therapeutics dropped -9.4% to $7.14, with Mesoblast tumbling -5.2% to $3.48, and Ramsay Healthcare declined -1.7% to $61.91.

The S&P/ASX 200 Index advanced +58.3 points, or +0.98%, to 5,977.5 while the broader All Ordinaries trekked +53.00 points, or +0.88% to 6,089.30.

For financials, the ‘Fab Four’ (banks) displayed a better performance, with Commonwealth Bank rising +2.1% to $72.12, with Westpac Banking Corp climbing +1.8% to end at $17.97, while National Australia Bank shares firmed +1.7% to $17.86 and Australia and New Zealand Banking Group added +1.9% to $18.64, while Macquarie Group advanced +2% to $122.15.

Listed fund and wealth managers, Platinum Asset Management, advanced +6.8% to $3.95 and Netwealth added +4.9% to $11.22.

As iron ore prices hold steady at $US107.05 a tonne, titans, BHP Group advanced +2.2% to $36.97, with Rio Tinto firmed +1.9% to $99.84 and Fortescue Metals Group climbed +3.4% to $15.36 and South32 added +3.9% to $2.12.

Woodside Petroleum rose +1.8% to $21.52, with Origin Energy adding +1.9% to $5.84, with Santos climbing +0.6% to $5.22 and Beach Energy gained +3.5% to $1.47.

Oil Search was fell on the backfoot after flagging up to $572 million in write-downs related mostly to its exploration licences in Papua New Guinea. Its shares tumbled -2% to $2.94.

Gold stocks slipped as safe-haven demand waned (somewhat) with Perseus Mining slipping -1.7% to $1.44, with St Barbara falling -1.1% to $3.59, with Gold Road Resources slipping -0.5% to $1.87 and Regis Resources tumbled -0.2% to $5.52.

Technology One shares slid after GMT Research said the company used accounting tricks to pull forward revenue and profits “artificially creating growth and hiding a major slowdown”.

While the company said the claims of the report were false and misleading, its shares still plummeted -6.4% to $8.18.

Afterpay traded in a choppy session and ended lower by +0.8% to $71.74, Appen slid -1.3% to $35.93, while Xero declined -0.4% to $92.85, WiseTech Global fell -0.8% to $20.17, EML Payments dropped -3% to $3.25.

Meanwhile, Altium declined -1.2% to $33.50 and Nearmap closed to a loss of -0.4% to $2.33.

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