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  • The ASX 200 climbed by as much as 2.4pc at the open of trade.
  • Wall Street leading the way, trading on optimism over the global economy opening back up. 
  • Eyes on the macro and Hong Kong risks which threaten the plight of the bull’s for a 61.8% ratio.

Australian shares have made a 50% mean reversion and are destined to the 61.8% golden ratio. This is a Fibonacci retracement level for which its counterparts on Wall Street have also achieved in recent sessions, with conviction.

At the time of writing, trading on optimism over the global economy opening back up, ASX 200 is trading at 5,911, over 2.3% higher having rallied from a low of 5.775 to a high of 5,913.5 so far. 

US stocks on Wall Street rallied again and sets up the ASX for gains today with futures at 9am AEST pointing to a gain of 50 points, or 0.9 per cent, at the open ahead of Reserve Bank of Australia’s Lowe appearing before the Senate Select Committee on COVID-19.

The ASX 200 climbed by as much as 2.4pc at the open of trade and the financials were again strong, adding 4 per cent in the first 15 minutes. A new 11-week high was made. The big four banks rose by between 3.1 per cent and 6 per cent and ANZ was the best of the pack with a 5.96 per cent rise to $19.01. The sector has now added more than 14 per cent for the week so far.

Hong Kong is a major risk

Meanwhile, Secretary of State Mike Pompeo said in a statement Wednesday that he has certified to Congress that Hong Kong is no longer autonomous from China and does not warrant special treatment under US law. The consequences of which will play havoc on the minds of investors and likely lead to a flight of capital from HK. More on this below: 

  • How do experts view financial conflict of top two economies? – The Global Times

  • USD/CNH: Bulls attack September 2019 top as US increases hardships for China

  •  China’s plan of national security law in Hong Kong puts Trump in an unwelcome spot with Xi 
  •  The Hong Kong Dollar, the next black swan?
  • As discussed in the following Chart of the Week analysis from the open of this week, US and Chinese tensions are at the forefront of markets.

Meanwhile, additional risks to financial markets come with Russia’s possible unwillingness to cooperate with OPEC. This has raised concerns that the oil price war has not seen its worst days, yet. The crisis in global energy markets may not yet be resolved which could destabilise global benchmarks. When oil crashed to below zero, ASX took a 7.5% hit. 

ASX 200 Index levels

The bulls are grinding higher and seek a close above the 50% mean reversion. Key daily resistances now turned support are here and then just below 5,500. On a continuation, bulls will target the 61.8% ratio which comes in at 6,127. However, from a fundamental basis, distribution tests could prevent completion of the correction to that golden ratio. If it is achieved, it could be a major discount for the bears –  The Hong Kong Dollar, the next black swan?