Australia: S&P/ASX 200 (.AXJO) gains on truce in US-China trade war

Australia: S&P/ASX 200 (.AXJO) gains on truce in US-China trade war

Australia: S&P/ASX 200 (.AXJO) gains on truce in US-China trade war

The Australian share market has closed higher for a third day, playing catch-up after the US and China struck a truce on tariffs after Friday’s close.

The benchmark S&P/ASX200 index rallied hard at the open but then gave up half of its gains later in the day to finish Monday up 35.8 points, or 0.54 per cent, to 6,642.6 points, while the broader All Ordinaries closed up 36 points, or 0.54 per cent, to 6,757.9 points.

“A good start to the week, but we remain sensitive to headline and tweet risk,” said CMC Market chief market strategist Michael McCarthy.

The difference in how the US and China described the truce was striking, with Donald Trump calling it the “greatest and biggest deal ever made for our Great Patriot Farmers,” and China not even calling it a deal, Mr McCarthy said.

Details on what the verbal agreement contains are scarce at this point, with the decision expected to take several weeks to formalise.

Energy shares were leading gains on Monday, up 2.9 per cent as they benefited not just from the trade deal but also a spike in the price of oil.

Santos surged 5.7 per cent to $7.85 after Australia’s second largest independent oil and gas producer agreed to pay $2.1 billion for ConocoPhillips’ northern Australia business.

Woodside Petroleum gained 2.5 per cent, Oil Search climbed 2.5 per cent and Origin Energy rose 1.8 per cent.

The tech sector was the second-biggest gainer, up 1.7 per cent, with machine learning dataset company Appen up 5.1 per cent to $22.59, printed circuit board software company Altium up 4.0 per cent to $33.38 and Afterpay up 2.8 per to $36.10.

Wealth platform Praemium spiked 18.9 per cent to 53.5 cents after reporting its funds under administration rose 24 per cent in the September quarter, to reach $20 billion for the first time.

The financial sector advanced 0.7 per cent as investors appeared to shrug off news that the competition watchdog would investigate why major lenders had not passed on the full extent of the central bank’s rate cuts to mortgage customers.

The big four banks were higher, with ANZ up 0.7 cent to $27.67, Commonwealth up 0.4 per cent to $79.07, NAB up 0.6 per cent to $28.36 and Westpac up 0.5 per cent to $28.90.

Macquarie rose 1.4 per cent, Janus Henderson climbed 5.4 per cent, Hub24 rose 6.0 per cent, Netwealth Group gained 4.3 per cent and Clydesdale bank owner Cyby rose 12.1 per cent to $2.41 on optimism for a Brexit deal.

In the heavyweight mining sector, BHP climbed 2.0 per cent to $36.53, Rio Tinto gained 2.2 per cent to $91.91 and Fortescue Metals rose 1.6 per cent to $8.95.

Gold miners were down an average of five per cent, however, as the price of the precious metal dipped to around $US1,487 an ounce after trading for days over $US1,500.

Newcrest fell 4.8 per cent, Northern Star, Regis Resource and Evolution all dipped 5.0 per cent and Silver Lake Resources tumbled 9.2 per cent.

Telecom stocks and utilities both a took hit, after previously benefiting from uncertainty over trade, collectively falling 1.0 and 0.8 per cent respectively.

Fisher & Paykel Healthcare rose 7.0 per cent to $17.08 after its new obstructive sleep apnoea mask received approval to be sold in the United States sooner than expected.

Shopping centre owner HomeCo made its debut on the ASX following a $325 million float, the biggest of the year, rising 11.9 per cent from its initial public offering price.

The Aussie dollar is buying 67.83 US cents, from 67.76 US cents on Friday.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 6,812.86.

The projected lower bound is: 6,472.43.

The projected closing price is: 6,642.65.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 73.8140. This is not an overbought or oversold reading. The last signal was a buy 4 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 52.06. 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 70 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 17. This is not a topping or bottoming area. The last signal was a buy 4 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 10 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 35.800 at 6,642.600. Volume was 26% below average (neutral) and Bollinger Bands were 2% wider than normal.

Open     High      Low     Close     Volume___
6,606.8006,676.2006,606.8006,642.600 489,298,400
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,589.30 6,592.71 6,365.60
Volatility: 20 17 13
Volume: 522,695,744 672,412,864 629,726,592

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 4.4% above its 200-period moving average and is in an downward 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 bearish on .AXJO and have had this outlook for the last 5 periods.

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