Wall Street kicks-off August on a positive tone as the bulls lift the markets higher on Monday as all three major U.S. Indexes try and build on its four-month winning streak as talks over another round of coronavirus stimulus appeared to have stalled.
At the finishing bell, on the New York Stock Exchange (NYSE), the Standard and Poor 500 index gained +23.49 points, or +0.7% to 3,294.61, its highest closing level since Feb. 21. The S&P 500 is also within 3% of reaching an all-time high.
The Dow Jones Industrial Average closed +236.08 points higher, or +0.9%, at 26,664.40. The Nasdaq Composite surged +1.5% to an all-time high (10,905.40), ending the day at 10,902.80.
The Australian Index Futures (SPI 200 futures contract) rallied +84 points or +1.4%, while our local currency, the Australian dollar, is currently buying US$0.7110 (as of writing).
Viewing the technical assessment for the S&P/ASX 200, the Relative Strength Index (RSI) 3-day lookback has rebounded, however, given a mixed assessment for the 50-midway point, while the MACD remains to a ‘weak’ sell signal.
Therefore, the close of today’s session is seen as a key point to the set-up of the initial trend.
The resistance is now viewed from the near-term cap seen at 6,075 minor, with 6,125 displayed above, while the support is established at 5,995 minor, with 5,940-45 considered beneath. Reassess from there.
Today is the Reserve Bank of Australia (RBA) August monetary policy meeting.
It is widely expected the central bank will maintain the target for the official cash rate at a record low of 0.25%.
All the attention will yet again fall on the bank’s accompanying monetary policy statement as a dovish statement could trigger a decline to the Australian Dollar.
RBA Governor Philip Lowe is expected to reiterate the central bank’s determination to keep the cash rate at 0.25% for as long as possible until inflation starts rising and unemployment falls sharply.
However, Victoria’s stage-four lock down will force the Reserve Bank to re-examine policy settings.
Daily outlook on the benchmark S&P/ASX 200
It was a wide ride for the Australian stock market on Monday as prices fell at the opening bell, however, soon recovered to end the session flat as the banking and consumer sectors weighed heavily on the market while gains in the healthcare and materials sectors offset some of those losses.
Fears about the long-term economic damage from tighter lockdowns in Victoria trigger the brief decline before the benchmark S&P/ASX 200 Index dropped -1.7 points, or -0.03% to close at 5,926.1 points for a third straight session in the red, while the All Ordinaries index closed lower by -4.4 points, or -0.07%, at 6053.9.
Despite Victoria significantly stepping up containment measures, the local share market did manage to hold up remarkably well, as shares in the major lenders have been hit as investors adjust their expectations for the economic recovery and borrower vulnerability.
The ‘Fab Four’ (banks), ended once again in a pool of red with the Commonwealth Bank falling -1.78% to $69.93, while Westpac Banking Corp plunged -3.51% to $16.49, Australia and New Zealand Banking Group plummeted -4.12% to $17.22, and National Australia Bank lost -4.08% to $16.94.
Macquarie Group fell -1.21% to $121.99, and Bendigo & Adelaide Bank lost -4.7% to $6.56. AMP was flat at $1.47.
For the big miners, iron ore titans provided some support, with BHP adding +1.6% to $37.34, Rio Tinto was up +0.98% to $103, and Fortescue Metals Group added +2.6% to close at $17.87.
Monadelphous Group shares tumbled -10.3% to $7.99 after announcing Rio Tinto was seeking almost $500 million in damages and compensation from the company over a fire that cruelled its iron ore operations in Western Australia.
The precious yellow metal kicked the week off to a strong start and shot to an all-time high of $1,989 as a softer U.S dollar and fears over the global economic fallout from surging coronavirus cases inspired increasing demand for the safe-haven metal.
Evolution Mining rose +2.88% to $6.07, Resolute Mining added +4.2% to $1.355, Newcrest Mining climbed +1.34% to $35.65.
Medical stocks were also firmer with biotechnology giant CSL rising +2.61% to $277.15, while Cochlear Limited rose +4.56% to $198.89, Ramsay Health Care added -1.93% to $62.65, Fisher & Paykel H. advanced +1.54% to $33.58, Sonic Healthcare added +1.3% to $32.50 and Mesoblast firmed +1.9% to $3.85.
Travel stocks also hit with Flight Centre plummeting -6.61% to $9.89, with Webjet down -7.1% to $2.63, Regional Express lost -6.4% to $1.02, Corporate Travel Management dropped -6.3% to $8.18, Sydney Airport slid -0.8% to $5.19 and Qantas lost -0.9% to $3.20.
SEEK fell -2.3% to $21.18 after announcing it was dumping its final dividend in a bid to preserve capital, blaming the “uncertain environment” for the decision.
Shopping centre owners Scentre Group dropped -5.64% to $1.925, and Vicinity Centres lost -2.68% to $1.27.
Coles and Woolworths also traded higher. Victoria’s lockdown measures allow supermarkets to remain open while several other businesses will be forced to close. Woolworths advanced +0.9% to $39.04, Coles firmed +1.6% to $18.46 and IGA owner Metcash rose +2.2% to $2.77.
Kogan.com rose +9.5% to $18.28 and Temple & Webster +1.2% to $7.61.
Our local currency, the Australian dollar, is currently buying US$0.7102 (as of writing).
With choppy waters predicted for an enormous economic calendar week ahead, we have Bank of England (BOE) Monetary Policy, with the more closely followed Non-Farm Payrolls (NFP) report from the Labour Department which will offer another look at the U.S. employment picture.