Mixed opening for the ASX as Wall Street rebounds and closes in positive territory

January 25, 2022 - 4 months ago
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The Australian share market is poised for a mixed opening on Tuesday after a volatile day on Wall Street ended the Monday session with a firm bounce after a steep sell-off late in the day managed to close in positive territory as bargain hunters returned.

The ASX futures lost -92 points or -1.3% to 6,960, while our local currency, the Australian Dollar, is currently buying US$0.7042 (as of writing).

The Dow industrials, S&P 500 and Nasdaq Composite all finished the day higher after climbing back from a steep slide that had knocked more than 1,200 points off the Dow Jones Industrial Average.

At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average gained +99.13 points, or +0.29, to 34,364.50, while the broad-based Standard & Poor’s 500 Index rebounded +12.19 points, or +0.28, to 4,410.13.

The late-afternoon comeback pulled the S&P 500 out of so-called correction territory — a drop of 10% or more from its recent high.

Meanwhile, the rich-tech Nasdaq Composite Index rose +86.2 points, or +0.63%, to 13,855.1.

Eyes now turn to the policy-setting Federal Open Market Committee (FOMC), which convenes its two-day monetary policy meeting on Tuesday.

At its conclusion on Wednesday, market participants will be parsing its concluding statement and U.S. Fed Chairman Jerome Powell’s subsequent Q&A session for clues as to the central bank’s timeline for hiking key interest rates to combat inflation.

Market participants expect the U.S. central bank to signal that rates will likely rise as soon as March.

In a sign that geopolitical tensions are heating up, NATO announced it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.

On Sunday, the State Department instructed the families of U.S. diplomats in Ukraine to leave the country, while the White House is considering sending several thousand troops to Europe.

War in Ukraine and its possible consequences—including the potential closure of the U.S. financial system to Russian banks—could play out in markets in unpredictable ways.

The dollar index climbed +0.24% to 95.80, while the 10-year U.S. Treasury notes yield gained nearly two basis points to 1.76%. Yields move in the opposite direction from prices.

Precious metals were mixed, with gold gaining +0.60% to $1,841 per ounce and silver slipping -1.10% to $23.96.

Crude oil prices declined -1.30%, with Brent crude trading at $86.30 per barrel and U.S. benchmark West Texas Intermediate crude at $84.06.

Iron ore prices slipped -2.7% at US$133.70 a tonne, while cryptocurrencies slipped after Bitcoin, the world’s largest cryptocurrency by market value, erased its declines over the last day, rebounded over +10% and is trading at US$36,380.00 (as of writing).

Based on the daily technical assessment of the S&P/ASX 200 (XJO), a mixed opening is foreseen, with the intraday support located at 7,095 (minor), with 7,050 assessed beneath.

The resistance is assessed from 7,175 (minor), with 7,225 located firmer above. Reassess from there.

Daily outlook on the benchmark S&P/ASX 200

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