The Australian share market is expected to stage a further rise on Thursday as Wall Street extends the previous session’s rebound, as several strong U.S. earnings figures captured investors attention away from the rapid spread of the Delta COVID-19 variant.
The ASX futures ended up +64 points or +0.9%, at 7,290, while our local currency, the Australian dollar, is currently buying US$0.7348 (as of writing).
A strong start to earnings season has helped buoy sentiment after Monday’s steep selloff sparked by concerns over rising coronavirus cases.
At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial rose +286.01 points, or +0.83%, to 34,798.00, and is sitting just a stone’s throw away from its record high.
The broad-based Standard & Poor’s 500 Index finished the session +35.63 points higher, or +0.82%, to end at 4,358.69, a day after the broad market gauge posted its biggest one-day gain since late March.
The technology-focused Nasdaq Composite Index gained +133.01 points, or +0.92%, to 14,632.00.
The yield on 10-year Treasury notes rose to 1.279% from 1.208% Tuesday, its largest one-day jump since June 16. Yields move in the opposite direction to bond prices.
Wednesday’s gains built on Tuesday’s strong session as all three major indexes have now erased the losses from Monday’s sell-off.
Better-than-expected earnings reports from Dow members Coca-Cola and Johnson & Johnson added to the bullish sentiment.
Meanwhile, Moderna joined the S&P 500, giving the stock a +30% boost from a week ago. Its shares gained nearly +4.5%.
A busy week of U.S. earnings will continue on Thursday, with AT&T, D.R. Horton, Southwest Air, American Airlines, Abbott Labs, and Union Pacific are among the names on deck before the opening bell. Intel, Twitter, Snap and Capital One will post quarterly updates after the U.S. market closes.
Investors will also be watching the weekly U.S. jobless claims number from the Department of Labor on Thursday, with the forecast expecting the number of first-time filings to be 350,000, down from the prior reading of 360,000.
Meanwhile, in cryptocurrency, Bitcoin rebounded in front of the key support level at $US28,500.00 and climbed over +6% to $US32,125.00 (as of writing) after Elon Musk’s comments that Tesla could soon begin accepting Bitcoin.
Viewing the S&P/ASX 200 (XJO) daily chart, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator has rebounded out of the oversold region and now flirts with the 50-midway point, while the Moving Average Convergence Divergence (MACD) holds a negative signal.
The Average Directional Movement Index (ADX) trend indicator has reverted back to the presence of a trading market and negated the bearish trend.
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 strengthens or weakens.
At present, the rebound has potentially given an extension to the rally, but caution is heeded, as the technical assessment remains mixed.
The short-term resistance is viewed at 7,360-65 with 7,405-15 seen above, while the support holds from 7,310 minor, with 7,270 located beneath.
Daily outlook on the benchmark S&P/ASX 200
On Wednesday, the Australian share market elevated out of the bearish trenches after a major comeback on Wall Street on Tuesday, as U.S. stocks rebounded sharply from Monday’s sell-off.
Except for industrials and information technology, nine sectors advanced into positive territory as investors stepped in to ‘buy the dip’ after yesterday’s sell-off, which was sparked from fears about inflation and the Delta variant of COVID-19.
At the closing bell, the benchmark S&P/ASX 200 index rose +56.5 points, or +0.78%, to 7,308.7, while the All Ordinaries added +55.1 points, or +0.73%, to 7,580.9.
Health Care were the star performer as Biotechnology giant CSL climbed +1.27% to $290.13, while ResMed rose +1.08%, to $34.76, Fisher & Paykel Healthcare advanced +0.91%, to $30.09, and Cochlear rose +1.38%, to $244.43.
Woodside Petroleum slid -0.09% to $21.88, while Oil Search ended up +3.59%, to $4.04, Santos climbed +1.23%, to $6.57, Beach Energy ended down -3.2%, to $1.21 and Worley climbed +1.1%, to $11.07.
Technology stocks slipped with Buy-now-pay-later giant Afterpay tumbling -0.38%, to $106.21, accounting software provider Xero dropped -0.63%, to $140.11, Altium fell -5.04%, to $32.81, Megaport added +0.06%, to $15.79, NEXTDC rose +0.32%, to $12.54, EML climbed +2.11%, to $3.87, Zip Co rose +2.29%, to $7.58 and Nearmap added +2.38%, to $2.15.
Materials remained in positive territory, with BHP Group leading the titans higher after climbing +1.32%, to $49.89, while Rio Tinto rose +1.17% to $125.87, and Fortescue Metals Group added +0.48%, to $25.29.
Gold stocks were mixed, with Newcrest Mining falling -0.15% to $26.07, Northern Star Resources rose +0.1% to $10.21, and Evolution Mining Ltd lost -2.86% to $4.07.
The Financial sector strengthened with Australia and New Zealand Banking Group leading the “Fab Four” (banks) higher after settling at a +1.21% gain to $27.65, while Commonwealth Bank ended up +0.83%, to $98.42, National Australia Bank added +1.06%, to $25.74, Westpac Banking Corp rose +0.98%, to $24.76 and Macquarie Group gained +1.28% and settled at $155.17.
Supermarket giants Coles and Woolworths were mixed as Coles fell -0.46% to $17.28, while its rival Woolworths added +1.12% to $38.93 and Endeavour added +1.73% to $6.46.
E-commerce group Kogan tumbled +1.45% and settled at $11.56, while Seek fell -0.68% to $30.69.
Meanwhile, JB Hi-Fi slipped -0.02% to $49.50, while Telstra ended flat at $3.73, while Wesfarmers advanced +2.34%, to $61.28, Aristocrat Leisure dropped -0.65%, to $41.19 and QBE Insurance rose +1.44% to $10.58.
Travel stocks were firmer with Sydney Airport falling -0.77%, to $7.75, Corporate Travel Management rose +2.97%, to $20.12, Flight Centre added +1.4%, to $14.51, and Webjet rose +1.28% to $4.75.