Australia: S&P/ASX 200 (.AXJO) edges higher as iron-ore strength steels miners

Australia: S&P/ASX 200 (.AXJO) edges higher as iron-ore strength steels miners

Australia: S&P/ASX 200 (.AXJO) edges higher as iron-ore strength steels miners

A rise in iron ore spot prices pushed up shares in Australia’s major iron ore producers on Monday and helped underpin a 0.3 per cent lift in the S&P/ASX 200 index to 6731.4. The steel ingredient is at four-week highs of $US84.50 per tonne thanks to strengthening Chinese steel futures.

The materials sector was the best performer on the market with Fortescue Metals reaching a fresh record closing price of $9.67. Rio Tinto closed 2 per cent higher at $95.92, its highest closing price since early August, and BHP Group gained 1.7 per cent to $37.85.

The market also did well thanks to Caltex leaping 7 per cent after announcing it will bundle up 250 petrol stations into a property investment opportunity. Afterpay Touch also surged 7 per cent after releasing an independent report on its anti-money laundering compliance that found it a “low risk business”.

One reason steel prices are rising was an expectation US and China could be moving closer to a trade deal, which would improve China’s economic activity.

“China, over the weekend, announced that it would tighten enforcement, lower guilt thresholds for intellectual property [IP] theft and make it easier to seek compensation from Chinese companies accused of IP miscreance. The small print said by 2022,” said OANDA’s senior market analyst for Asia Pacific, Jeffrey Halley.

“Although long on promise, but short on detail, China’s move appears to be an attempt to mollify one of the US’ main reasons for initiating the trade war in the first place. The hope being to get impetus back into the interim trade talks.”

However, the materials sector also contains Nufarm, which dropped 17.5 per cent to $5.08 after warning of a sharply weaker first-half profit. Nufarm said that “trading conditions have been difficult for 2019-20 to date and this has resulted in lower earnings in all regions for the first quarter compared to the prior year”. It expects first-half earnings before interest, tax, depreciation and amortisation (EBITDA) to be “significantly lower than the prior year”.

Gold miners also declined as the price of the precious metal remains about $US1461.47 per ounce.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 6,868.91.

The projected lower bound is: 6,596.21.

The projected closing price is: 6,732.56.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 38.1006. This is not an overbought or oversold reading. The last signal was a sell 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.99. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 100 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 1. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 21.600 at 6,731.400. Volume was 19% below average (neutral) and Bollinger Bands were 41% narrower than normal.

Open     High      Low     Close     Volume___
6,712.0006,758.0006,712.0006,731.400 520,989,920
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,739.77 6,686.71 6,495.01
Volatility: 14 13 13
Volume: 588,145,664 605,339,648 637,381,376

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

S&P/ASX 200 is currently 3.6% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .AXJO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 20 periods.

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