Rough seas return – ASX to fall

April 21, 2021 - 4 weeks ago
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The Australian share market poised to drop at the open as bearish volatility picks up in the overnight’s session.

The ASX futures were down -86 points, or -1.2%, at 6,911, while our local currency, the Australian dollar, is currently buying US$0.7728 (as of writing).

U.S. stocks tumbled on Tuesday, extending their losses as concerns about rising coronavirus cases globally offset healthy U.S. corporate earnings reports for the first quarter.

At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial fell -256.33 points, or -0.8%, to 33,821.30 as Boeing and Nike both dropped more than -4%.

The broad-based Standard & Poor’s 500 Index lost -28.32 points, or -0.68% to 4,134.94 for a second straight day of declines, while the rich-tech Nasdaq Composite Index dipped -128.50 points or -0.92% to 13,786.27.

Apple Inc. launched a new iMac and iPad with its M1 chips at a spring event Tuesday, although shares slipped -1.3%.

In after-hours trading, shares of Netflix dropped -11% after the streaming giant said its first-quarter subscriber growth fell short of expectations—adding only another 4 million subscribers globally, less than its forecast of 6 million.

The 10-year U.S. Treasury yield edged down to 1.562% from 1.599% on Monday in the bond market. Yields fall as prices rise.

A pickup in new COVID-19 cases globally is putting a damper on sentiment after the World Health Organization warned that global coronavirus infections were edging toward their highest level in the pandemic.

News sources reported a global daily new case tally almost hit a record of more than 750,000 on Sunday and Monday, as India and Brazil remain hot spots.

The U.S. has averaged 67,175 new cases a day in the past week, up 4% from the average two weeks ago, but about 50% of U.S. adults have now received one shot of vaccine.

Johnson & Johnson shares gained 2.3% following better-than-expected earnings and revenue. The company also reported $100 million in first-quarter sales of its Covid-19 vaccine that’s on hold in the U.S. while health regulators investigate a rare blood-clotting issue.

Viewing the technical standpoint for the S&P/ASX 200 (XJO), the two negative Japanese candlesticks, the Hanging Man and the Gravestone Doji have unleashed the bears.

The current decline now looks to a potential target of 6,900-35. Reassess from there.

Meanwhile, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator has dropped away from the overbought territory and plummeted through the 50-midway point, strengthening the negative signal.

Meanwhile, the Moving Average Convergence Divergence (MACD) positive signal weakens as it declines towards the 0.00 axis.

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.

Viewing the (XJO) technical aspects, it is assessed that renewed upside contests may again fail due to the technical implications from the two bearish Japanese candlesticks, along with the Relative Strength Index (RSI) bearish condition.

The support is located at 6,900-35, with 6,870 is located beneath. Reassess from there.

The resistance is now viewed 6,990-95, with 7,060-65 located above.

Daily outlook on the benchmark S&P/ASX 200

The Australian share market snapped its ‘mixed’ twelve-day bullish streak to close in the red on Tuesday, weighed down by Information Technology, Health Care, Energy, Financials, and profit-taking.

The benchmark S&P/ASX 200 index backed away from the 13-month highs and fell -47.8 points, or -0.68%, to 7,017.8, after the local share market came within 100 points (striking distance) of the February 2020 all-time high inked in at 7,197.20.

The broader All Ordinaries tumbled -45.9 points or -0.63% to 7,282.1.

The mining giants fell despite the price of iron ore rising to a nine-year high on Monday.

Fortescue Metals Group adding +1.83% to $21.20, and BHP Group lost -0.23%, to $47.45.

Rio Tinto Limited, meanwhile, reported its flagship iron ore division made its best start to a year since 2018, shipping 77.79 million tonnes from Western Australia in January-March; Rio shares fell -0.54% to $120.20.

Other mining stocks were mixed weaker, with Pilbara Minerals falling -1.89% to $1.30, Mineral Resources firmed +3.02%, to $45.08, and IGO closed flat at $6.98.

Buy-now-pay-later giant Afterpay said it was considering listing its equities in the U.S. as part of a third-quarter update that showed North America was now the largest contributor to its sales and that the U.S had recorded more than $1 billion in underlying sales in a single month. Its shares dipped -0.77%, to $125.23.

Accounting software provider Xero dropped -1.41%, to $143.73, Altium plummeted -5.24%, to $28.41, Nextdc tumbled -1.01%, to $11.77, Appen fell -1.44%, to $16.38, EML rose +0.73%, to $5.50 and Zip Co added +0.67%, to $9.00.

Gold stocks were mixed as the precious metal bulls staged a minor retreat from a seven-week peak at $1,790.

Newcrest Mining climbed +0.25% to $27.90, Northern Star Resources dropped +0.79% to $11.37, Evolution Mining Ltd ended flat at $4.74.

Real estate shares were weaker, with Charter Hall lost -0.59% to $13.55, Lendlease slid -1.91% to $12.84, and Goodman Group rose +1.48% to $19.19.

As for our oil and gas producers, Woodside Petroleum lost -1.19% to $23.34, while Oil Search fell -1.27%, to $3.90, Santos fell -0.57%, to $7.02, and Worley ended to a +0.19% gain of $10.55.

Telstra added +0.59%, to $3.39, while Woolworths lost -0.9%, to $41.63, Wesfarmers tumbled -0.57%, to $55.51, QBE Insurance fell -0.93%, to $9.56, and Aristocrat Leisure slipped -1.52%, to $36.35.

The Financial sector was weaker with Commonwealth Bank leading the “Fab Four” (banks) lower by +1.24%, to $87.74, while National Australia Bank ended down -0.67%, to $26.50, Australia and New Zealand Banking Group lost -0.93%, to $28.66, Westpac Banking Corp fell -0.47%, to $25.24 and Macquarie Group dropped -0.81% and settled at $156.00.

Adairs shares climbed +6%, to $4.77, while Super Retail Group gained +0.9%, to $12.30, and JB Hi-Fi added +0.9%, to $52.98.

Travel and tourism companies were mixed with Helloworld falling -1.9%, to $2.07, Corporate Travel Management rose +0.95%, to $19.03, Webjet lost -0.19%, to $5.17, Flight Centre added +0.56%, to $17.73 and Qantas lost -1.34% to $5.01.

Sydney Airport dropped -1.6%, to $6.04, despite the number of domestic passengers almost doubling in March from February as domestic borders remained open.

Biotechnology giant CSL lost -1.62%, to $263.95, while ResMed fell -1.79%, to $26.42, Fisher & Paykel Healthcare slid -0.32%, to $31.01, while Cochlear lost -1.27%, to $221.26 and Mesoblast lost -2.18%, to $2.24.

Stockland shares dropped -2.4%, to $4.51, despite upgrading its forecast for settlements this year, reporting investor inquiries have more than doubled from their trough last year.

Temple & Webster shares gained +1.5%, to $10.91 after it said trading continued to exceed expectations.

Sales growth slowed to 20% in April, from 112% in the March quarter as the retailer cycled a strong performance from the previous year.

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