ASX set for a firmer start as U.S. retail earnings lift Wall Street

May 27, 2022 - 1 month ago
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The Australian share market is poised for a firmer start as it takes a cue from last night’s bounce on Wall Street.

The Australian SPI 200 futures contract was up +69 points, or +0.97%, at 7,176, while our local currency, the Australian dollar, is currently buying US$0.7098 (as of writing).

U.S. stocks ended with gains Thursday after positive results from U.S. retailers lifted sentiment across the market after rising 0.9% in April, a solid increase that underscores Americans’ ability to keep ramping up spending even as inflation persists at nearly a 40-year high.

At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average gained +516.91 points, or +1.6%, to 32,637.19.

The broad-based Standard & Poor’s 500 Index rose +79.11 points, or +2%, to 4,057.84, while the rich-tech Nasdaq Composite Index finished higher, climbing +305.91 points, or +2.7%, to 11,740.65, helped by gains in shares of Apple, Microsoft, Amazon, and Tesla.

In economic data, the U.S. economy shrank more than previously thought in the first quarter of the calendar year after the Commerce Department said that the GDP annual rate was -1.5% in the first three months of this year, more than its prior estimate -1.4%.

It is the first decline since the second quarter of 2020 when the economy was in a pandemic recession.

Meanwhile, the initial U.S. jobless claims totalled 210,000, a decline of 8,000 from the previous week.

The US dollar index (US DXY), which tracks the greenback against a basket of its peers, slipped by -0.24% to 101.70, while in the bond market, the yield on the benchmark 10-year U.S. Treasury note rose to 2.756%, from 2.746% Wednesday. Yields climb when bond prices decline.

Precious metals slipped as spot gold lost -0.2% to $1,848, and silver was flat at $21.95.

Crude prices rose, with global oil benchmark Brent crude adding +2.8% to $117.30, while the U.S. benchmark West Texas Intermediate (WTI) was at $113.90, a +3.1 gain.

Meanwhile, iron ore prices lost -1.6% to US$131.25 a tonne, and cryptocurrencies Bitcoin, the world’s largest cryptocurrency by market value, fell by -0.8% and is trading at US$29,420.00 (as of writing).

Based on the daily technical assessment of the S&P/ASX 200 (XJO), a firmer opening is foreseen, with the intraday resistance seen at 7,185 minor, with 7,210-25 located above. Reassess from there.

Assessing the downside, the support is located at 7,090 minor, with 7,070 viewed beneath. Reassess from there.

With the bearish trend still looming, it expects further downside pressure in the broader assessment, which could see a potential challenge of the region at 6,900-40 in the not-too-distant future. Reassess from there.

Daily outlook on the benchmark S&P/ASX 200

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