ASX bears are leaving no stone unturned

February 27, 2020 - 1 month ago
Share on twitter
Share on facebook
Share on linkedin
Share on email

The bears are leaving no stone unturned as another turmoil session on Wall Street views all three major U.S. stock indexes (at one point) trading in positive territory, before turning lower in afternoon trade on Wednesday, as investors continued to weigh the fast-spreading coronavirus and its impact on the economy.

So far, the S&P 500 had erased roughly $1.737 trillion, the most significant drop since 2015, when the Chinese government devalued the yuan amid the U.S.-China trade war.

The Dow ended to a loss of -123.77 points, or 0.46%, while the S&P 500 fell -11.79 points or -0.38% and the tech-heavy Nasdaq Composite manages to keep its head above water and closed +15.16 points or +0.17.

If we combined the benchmark S&P/ASX 200 index price action over the last five trading days, since the peak of the all-time high at 7,197, (posted last Thursday), to the intraday low (yesterday) at 6,690, now erases a total -7.58% of the index, with the close on Wednesday nearly wiping out all of 2020 gains, with the January’s low inked in at 6,669.

The massive sell-off since Monday to Wednesday has seen the benchmark S&P/ASX 200 index erase a window between $130 to $143 billion, its most significant three-day fall since August 2015, as fears about the coronavirus mount.

As the crowd now slowly packs the ASX arena, the index points to another fall, however, to what extent is another question, as the technical pattern is in extreme oversold condition.

The SPI 200 futures ended down -14 points, or -0.2% to 6,641.

From a technical perspective, due to the significant sell-off, the technical pattern, viewing the Relative Strength Index (RSI), is at extreme lows, last viewed back in August 2019.

Developed by J. Welles Wilder, the (RSI) is a momentum oscillator that measures the speed and change of price movements.

Signals can be generated by looking for divergences and failure swings. (RSI) can also be used to identify the general trend.

The (RSI) oscillates between zero and 100.

Viewing the 3-day lookback, the (RSI) is considered overbought when above 90 and oversold when below 10.

At present, the (RSI) indicator is sitting beneath the 10 levels at 3.24.

It is assessed the bulls may soon stage a return viewed from the support level (bullish foundations) at 6,600-60.

As for the Australian dollar, our local currency is currently under bearish pressure against its rival, the greenback, as it now extends yesterday’s fall and hitting a fresh 11-year low at US$0.6541, with the bearish journey holding towards the region of US$0.6400.

As of writing, the Australian Dollar is currently buying US$0.6545 cents against the USD.

Daily outlook on the benchmark S&P/ASX 200

It was another day in the bearish trenches for the Australian share market bulls as another round of bearish bombardment from all for corners limited any advancement.

Out of the total value of Australia’s top 200 companies, 180 have fallen into negative territory.

At the of the Wednesday’s session, the benchmark S&P/ASX200 index ended in negative territory, losing -158.5 points, or -2.31%, to 6,708.1, while the broader all ordinaries index plunged -163.1 points, or -2.35%, to 6,709.7.

Tech stocks took a hit of losing -3.6%, while consumer discretionary fell -1.6%.

Biotech company PolyNovo was hit the most on the ASX after plunging -20.5% after reporting a $2.4 million loss, although the company still gained +21.8% on the year.

Meanwhile, CSL plunged -4.1% to $310.59 and is way off the all-time high around $340.00 last week.

In the meantime, supermarket giant, Woolworths fell -2.7% to $40.73 after reporting a -7.7% decline in its first-half net profit after tax to $887 million.

The decline was mostly due to one-off costs from the restructuring of its hotel and drinks business, Endeavour Group and remediation for staff underpayments, which has increased to $315 million.

WOW did experience sales growth across all its business segments, including struggling discount retailer Big W, which recorded 1H profit for the first time since 2016.

Titans, BHP tumbled -2.2% to $35.55, while Rio Tinto dropped -1.8% to $91.89, while gold miner Newcrest fell -2.9% to $28.24.

Construction material and lime producer Adelaide Brighton plummeted -5.0% to $2.88 after reporting a whopping -74.5% drop in full-year net profit, to $47.3 million, amid a weak Australian residential construction market.

The financial sector was hit by more than -2% as shares of Australia’s so-called “Fab Four” (banks) fell, with Australia and New Zealand Banking Group dropping -2.9% to $26.07, while the Commonwealth Bank of Australia slipped -1.79% to $85.35, meanwhile, Westpac Banking Corp declined -1.89% to $24.66, and National Australia Bank tumbled -2.54% to $26.24.

Healius shined on the ASX surging +15.2% to a three-month high of $3.18 after announcing a Swiss private equity firm had made a tentative $2 billion takeover offer of $3.40-per-share for the medical centre, pathology and imaging group.

Funeral homegroup Invocare jump +13.6% to a six-month high of $14.48 after reporting a massive +54.6% rise in full-year profit after the number of deaths rebounded from an unusual dip in 2018.

Virgin Australia (VAH) rose +4% despite the airline facing a hit of $50-$70 million to 2H earnings from the coronavirus impact.

Elsewhere, Nine Entertainment (NEC) improved +6.5% with underlying profit rising +5% to $114 million. While broadcast TV and print advertising remained weak, its digital streaming business, Stan, outperformed.

Share on twitter
Share on facebook
Share on linkedin
Share on email

Leave a Reply

Close Menu