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- Aussie shares jumped 3.0 per cent in early trade, breaking a 61.8% Fib retracement level.
- Gains in Australia have been led by the financial sector, property and industrials have also been performing well.
Aussie share prices were 3.0 per cent in early trade, taking the lead from strong gains on Wall Street overnight. At the time of writing, the ASX200 benchmark index is up 2.55% having travelled in a range of between 5,998.70 to a high of 6,198.60.
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Property and industrials have been performing well as well this session, up 4.2 and 3.79 per cent respectively while the health sector index took a knock, losing 1.37 per cent.
Gains in Australia have been led by the financial sector, which surged by 4.93 per cent, followed by energy, up 4.87 per cent and positive data likely underpins the bullish sentiment going forward:
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Meanwhile, among the big four banks, ANZ was up 6.22 per cent to $21.00, the Commonwealth Bank picked up 4.64 per cent to $71.92, NAB rose by 5.44 per cent to $20.54 and Westpac gained 5.99 per cent to $19.91.
Looking ahead
“The fact that the Australian government has been very successful in containing COVID-19 should have a positive impact on consumer confidence as the shutdown restrictions are lifted and the economic recovery takes hold,’ analysts at Rabobank explained.
Expectations for more fiscal stimulus to avoid a prolonged slowdown in residential construction and employment have also been supportive. This optimism has even led to speculation that Australia may be able to side-step recession once again.
However, official data out last week showed the economy had already contracted in the March quarter ahead of what is expected to be a sharp downturn this quarter, leading the government to concede the country had entered its first recession since 1991.
While improved risk appetite could squeeze further gains for Aussie shares, the full whack of the global slowdown and the fractious US/China relations could well bear down on Australia.
ASX 200 Index levels
The bulls have broken the 61.8% Fibonacci retracement of 6124. However, bears will be looking to the US markets for a correction and a template for the index.
5502 comes as a compelling level to the downside, around a 38.2% Fibonacci retracement. A continuation, however, will open prospects for a recovery to the 6300s.