ASX expected to edge higher, despite mixed leads from overseas markets

By Trevor Hoey. Published at May 5, 2020, in Market Wrap

The S&P/ASX 200 (XJO) had a rocky ride on Monday, continuing its downward trend from Friday’s fallout in morning trading before staging a comeback to finish up 74 points or 1.4% to 5319 points.

We mentioned yesterday that building approvals for March would be released, and that this information could impact companies that provide services to the construction sector.

While new housing approvals fell 4%, this was better than expected.

However, a number of stocks exposed to the building industry took a hit, arguably because investors anticipate that March data is the thin edge of the wedge with things set to worsen in the coming months.

There were mixed leads from overseas with the FTSE 100 down slightly, while sharp falls were recorded in Germany and France.

The US was also a mixed bag with the Dow just edging into positive territory in the last hour, while the NASDAQ posted a 105 point gain.

The SPI200 indicates the ASX could see another positive day, up 17 points to 5335 points.

24 hours

Looking across the time zones, Australia fared much better than Asian markets where the Hang Seng was hit hard, tumbling 1030 points or 4.2% to close at 23,613 points.

The Nikkei 225 shed 2.8% or 574 points, closing at 19,619 points.

The Shanghai Composite bucked the trend, increasing 1.3% to 2860 points.

The UK market opened sharply lower with the FTSE 100 slumping to about 5700 points before finishing the day at 5754 points, down 0.2%.

However, the real carnage was in mainland Europe with the CAC 40 plunging 194 points or 4.2% to close at 4378 points.

The DAX didn’t fare much better, shedding nearly 400 points or 3.6% to close at 10,467 points.

While the Dow spent most of the day in negative territory, hitting a low of 23,361 points, a late rally saw it close at 23,750 points, a gain of 0.1%.

The S&P 500 was up 0.4% to 2842 points.

However, the NASDAQ was the star performer, led higher by strong performances across the tech sector as it gained 105 points or 1.2% to close at 8710 points.

As US markets staged their late rally the CBOE Volatility Index started its decline, finishing down 3.3% at 36 points.

On the commodities front, Brent Crude rallied 3.1% to US$27.26 per barrel driving strong gains in the likes of ExxonMobil and Chevron.

There was little movement in the gold price as it continued to fluctuate between about US$1700 per ounce and US$1725 per ounce.

The Australian dollar is fetching just over US$0.64.

The RBA will be releasing its monetary policy decision at 2:30 PM today with analysts generally of the view that the cash rate will remain unchanged.

However, the rhetoric accompanying the RBA’s statement will be closely examined to gain an idea of what may play out in the coming months.

This being the case, there could be some volatility in the Australian dollar.

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