- Risk-on sentiment takes the bulls through a key resistance level.
- Global US stocks are on the rise as investor look through COVID-19.
- Aussie miners are outperforming as gold shoots to fresh highs.
Following ASX SPI200 index futures climbing 10 points or 0.2 per cent to 5500 after the S&P 500 in the US rallied more than 3 per cent, ASX 200 index in Asia today is higher also by 0.93% at the time of writing. The index has travelled from a low of 5,372 to a high of 5,544 so far.
Global US stocks are on the rise on the prospect of the economy re-opening and a slow down in COVID-19 contagion while liquidity and stimulus are being injected into the global economy, in the absence of business activity, to stabilise financial conditions.
However, what should be kept in mind is that the IMF has issued its latest World Economic Outlook, entitled “The Great Lockdown: Worst Economic Downturn Since the Great Depression”. The IMF projects a 2020 contraction in world growth of -3%, with US -5.9%, Euro Area -7.5%, UK -6.5%, Australia -6.7%, and China +1.2%. This does not make good headlines, yet markets are seeing through them, despite the risks of a rebound in new cases as businesses economies open up again leading to less social distancing and the chances of COVID-19 infection.
Despite being the most infected nation, it is America that is ringing the bell on the lockdowns. Reuters reported that ten states were coordinating regional plans to lift ‘stay-at-home’ orders and allow businesses to re-open. White House economic adviser Larry Kudlow said, “the country is ready to go back to work.” Also, today, Trump dropped a number of determined comments as well after the Wall Street close about getting back to work, seeing a light a the end of the tunnel. More on that here: US President Trump: We can see the rays of light, we see that tunnel and light at the end
Precious metals miners jump with bullish opening gaps
As for performers, miners continue to outperform with Northern Star Resources (NST) up 14% in the open following a strong session for gold prices (more on that here) and St Barbara shares ar +10% in a strong opening bullish gap.
ASX 200 Index underpinned by bullish Dr Copper
Another booster for the Australian markets was a rally in copper, partly driven higher by a sharp rise in risk sentiment.
“There are estimates that as much as 25% of copper production may have been impacted with operations for instance at the Antamina mine in Peru suspended after workers tested positive at the weekend; the mine will remain closed for two weeks. Copper hit $5,200 for the first time in 4 weeks,”
analysts at Westpac explained.
As for yields, the Australian 3-year government bond yields were stable between 0.27% and 0.28%, while the 10-year yield ranged between 0.88% and 0.94%.
ASX 200 Index takes out the 38.2% Fibonacci retracement
The ASX 200 has pierced a key 38.2% Fibonacci level. A hold above this resistance opens risk to 5645 as the next resistance structure. To the downside, bulls will look for the 5090s support structure to hold.
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