ASX to rise as Dow rallies, S&P 500 hits 3800 and Nasdaq hits 13000

January 8, 2021 - 2 weeks ago
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All three major U.S. stock indexes latest rally adds to gains from a day before, reaching new records on Thursday despite the U.S. political unrest.

The bullish sentiment strengthened after Congress confirmed Joe Biden as the winner of the presidential election and Jon Ossoff was declared the winner of a Georgia runoff election, tipping control of the Senate to Democrats.

Shortly after Congress certified his loss, President Trump issued a statement saying there will be an “orderly transition on January 20th.”

Trump still claims falsely that he won, having appeared to excuse the violent occupation of the Capitol by his supporters.

U.S. House Speaker Nancy Pelosi urged Trump’s immediate removal from office through the 25th Amendment.

President-elect Joe Biden accused Trump of fomenting violence and said Wednesday was one of the darkest days in U.S. history.

Investors anticipate the Biden administration and a Democrat-controlled Congress will deliver more stimulus spending to help the US economy overcome a steep pandemic-induced downturn.

At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average advanced +211.73 points, or +0.69%, to 31,041.13.

At one point, the Dow was up more than +300 points.

The Standard & Poor’s 500 Index was trading +55.65 points, or +1.48%, reaching 3,803.79, the largest one-day and percentage gain since late November 2020, a new all-time high for the broad-market index.

Meanwhile, the rich-tech Nasdaq Composite climbed +326.69 points, or +2.56%, to reach a milestone at 13,067.48, a closing high as shares of Microsoft and Alphabet both gained more than +2%, and Apple rose +3.4%.

The ASX futures rose +21 points, or +0.3%, to 6,672, while our local currency, the Australian dollar is currently buying US$0.7768 (as of writing).

According to news sources, Elon Musk is now the world’s richest person after reports indicated his net worth has surpassed Jeff Bezos, who had held the top spot since October 2017, when Tesla was up +4.8%.

In 2020, Tesla’s shares rose to more than +740%.

The electric-car maker’s stock rose +7.94% to US$816.04 in New York, lifting its market cap to $US773 billion ($995 billion) and making it Wall Street’s fifth-most-valuable company, just behind Google-parent Alphabet and ahead of Facebook.

Talking of Facebook, the technology giant has banned President Donald Trump from using its platform indefinitely.

“We believe the risks of allowing the president to continue to use our service during this period are simply too great,” CEO Mark Zuckerberg wrote in a statement.

Viewing the technical standpoint, the Relative Strength Index (RSI) 3-day ‘lookback’ the indicator currently holds above the 50-midway point, which in terms supports a positive signal, while the Moving Average Convergence Divergence (MACD) holds to a negative signal but has weakened due to the recent climb.

The Average Directional Movement Index (ADX) trend indicator is ranging.

Developed by J. Welles Wilder, the Relative Strength Index (RSI) is an extremely popular momentum indicator (oscillator) that measures the speed and change of price movements.

RSI oscillates between zero and 100.

According to Wilder, (depending on the period setting), the RSI is considered overbought when above 90 and oversold when below 10.

Signals can also be generated by looking for divergences, failure swings and centerline 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.

Since the rebound, the bulls are expected to hold the helm to navigate to the topside of the 6-week range, with the resistance viewed at 6,755-65, which is expected to draw a bearish response.

The minor support is located from 6,690, with a potential base forged from 6,580-90.

Daily outlook on the benchmark S&P/ASX 200

The Australian share market booked its best performance in two months as investors shrugged off the turmoil in the U.S.

Even though the Capitol building in Washington was put on lockdown, Trump supporters were seen breaking windows, walking through the building, waving flags and clashing violently with police.

The Capitol’s attack forced the Senate and the House of Representatives to halt their debate over the congressional certification of Joe Biden’s electoral victory over Trump in November’s presidential election, which is usually a ceremonial affair.

The process has since resumed, as lawmakers have just started the procedural process of counting the Electoral College votes and formally declaring President-elect Joe Biden the winner.

President-elect Joe Biden defeated President Trump by 306-232 electoral votes.

Biden has also passed 270 votes in the electoral college vote, meaning his inauguration path on January 20 is clear.

At the closing bell, the benchmark S&P/ASX 200 index erased the previous day loss and chalked up +104.85 points, or +1.59%, to 6,711.95, while the All Ordinaries surged +99.10 points, or +1.44% to settle at 6,980.50.

Our major local miners continued to shine after putting in a stellar performance, with Rio Tinto leading the titans higher after surging +8.56% to $125.66, while BHP Group rallied +6.08% to $46.90, Fortescue Metals Group added +3.47%, to $25.92 and Mineral Resources climbed +3.27%, to $39.76.

Gold resources struggled to advance with Newcrest Mining falling -0.29%, to $27.59, Northern Star Resources lost -0.97%, to $13.31, Westgold slipped -2.92%, to $2.66.

Meanwhile, OZ Minerals rallied +6.27%, to $20.77, Saracen Minerals slid -1.93%, to $5.00, Ramelius Resources declined -0.56%, to $1.76, Silver Lake Resources closed -4.25% lower to $1.915 and Evolution Mining Ltd lost -2.32%, to $5.05.

The Financial sector lifted the Index with Australia and New Zealand Banking Group leading the “Fab Four” (banks) higher by +3.78%, to $23.64, with Westpac Banking Corp added +3.2%, to $19.99, National Australia Bank rose +2.81, to $23.04, Commonwealth Bank climbed +2.03%, to $84.58, and Macquarie Group rallied +1.94% and settled to $138.45.

As for our oil and gas producers, Woodside soared +5.05%, to $24.35, Oil Search surged +6.94%, to $4.16, Origin Energy added +3.48%, to $5.06, AGL Energy added +0.58%, to $12.10 and Santos climbed +7.42%, to $6.95.

Buy now, pay later Afterpay plummeted -4.71%, to $108.85, WiseTech fell -1.11%, to $28.59, Computershare added +0.57%, to $14.20, and Xero fell -5.05%, to $140.53.

Travel stocks managed to keep above the waterline with Webjet adding +0.59%, to $5.08 and Flight Centre climbed +0.58%, to $15.74.

Biotechnology giant CSL lost -1.21% to $275.00, while ResMed fell -0.37% to $27.00, Fisher & Paykel Healthcare dropped -1.3% to $30.29, while Cochlear lost -1.34% to $182.50 and Mesoblast ended flat at $2.26.

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