Will late session sell-off in US markets end the ASX’s rebound?

Published 06-MAY-2020 09:02 A.M.

|

3 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.


Click Here to View Latest Articles

In a welcome relief after last Friday’s rout, the ASX has strung together two very positive days with the S&P/ASX 200 (XJO) gaining 87 points on Tuesday to close up 1.6% at 5407 points.

This came on the back of Monday’s gain of 74 points, but still leaves the index well shy of the 5522 points that was struck last week which represented a seven-week high.

There was a welcome bounce in energy stocks as Origin Energy (ASX:ORG) and Santos (ASX:STO) each gained more than 5%.

The banks also experienced positive momentum led by National Australia Bank (ASX:NAB) and Westpac (ASX:WBC).

As expected, the RBA maintained the official cash rate at 0.25%, but there was also an air of confidence about Governor Philip Lowe’s statement.

He noted that financial markets were working more effectively than a month ago.

In terms of support, the RBA is bolstering short-term bank funding to the tune of $8.8 billion to ease the stress in global credit markets.

Though overseas markets were generally positive, the SPI200 Futures is down 12 points to 5404 points.

24 hours

Aside from Japan, Asian markets were in sync with Australia yesterday.

While the Nikkei 225 slumped 2.8% or 574 points to close at 19,619 points, both the Hang Seng and the Shanghai Composite gained ground.

The Hang Seng rallied 255 points to close at 23,868 points, an increase of just over 1%.

The Shanghai Composite was up 37 points or 1.3%, closing at 2860 points.

Solid gains in the UK were accompanied by a substantial rebound in mainland European markets.

The FTSE 100 gained nearly 100 points or 1.6% to close at 5849 points. The DAX surged 262 points or 2.5%, to close at 10,729 points. The CAC 40 was up more than 100 points or 2.4%, closing at 4483 points.

In the US, the Dow’s performance was similar to the prior day in that it looked poised to register a very solid gain, mirroring European markets, but a fall of more than 200 points in the last hour of trading wiped a significant proportion of gains made earlier in the day.

The index finished up nearly 0.6%, closing at 23,883 points.

The S&P 500 gained 0.9%, closing at 2868 points.

The NASDAQ was the best performer, rallying nearly 100 points or 1.1% to close at 8809 points.

But similar to the Dow, the NASDAQ shed 100 points in the last hour, and it is this negative finish to the session which perhaps accounts for the SPI200 pointing to weakness in our markets.

Oil surges after positive API statement

Oil was the star performer on the commodities front with Brent surging approximately 14% to US$31.85 per barrel.

The American Petroleum Institute reported late Tuesday that US crude supplies rose by 8.4 million barrels for the week ended May 1.

The API data also showed gasoline stockpiles down by 2.2 million barrels, while distillate inventories climbed by 6.1 million barrels.

Gold consolidated its position above US$1700 per ounce, closing at US$1714 per ounce.

Base metals generally gained ground with zinc being one of the better performers as it closed at US$0.86 per pound, a significant increase from its March low of approximately US$0.82 per pound which represented a four-year low.

The Australian dollar strengthened after yesterday’s RBA’s statement, but it lost some of those gains as US markets unravelled and it is now just above US$0.64.

The CBOE Volatility Index continued to fall, slipping below the 32 point mark overnight.

However, the late session volatility was reflected in its performance as it rebounded to 33.6 points in the last two hours of trading.

Investors will be closely monitoring retail sales data released today in order to determine sub-sectors to steer clear of and pockets of value that may have emerged due to the consumer discretionary sector being comprehensively sold down.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.

 

Discover Small Cap
Biotech Stocks

Join thousands of other Investors following our stock commentary for Free

X