ASX expected to rise, as the Wall Street bulls run

March 18, 2020 - 2 weeks ago
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It was a more welcoming trading session for the bulls on Wall Street as all three of the major U.S. stock market indices finished higher on Tuesday, staging a rebound after one of the ugliest days on record for the market in the prior session.

In a White House press conference on Tuesday on coronavirus updates, Treasury Secretary Steven Mnuchin outlined some measures the Trump administration will take to combat the coronavirus fallout that was deemed positive by investors.

U.S. stocks advanced as President Donald Trump, Treasury Secretary Steven Mnuchin and Vice President Mike Pence gave a televised briefing to outline the steps the administration is taking.

Mnuchin pitched a staggering $1.2 trillion economic response package to Senate Republicans.

“We’re looking at sending checks to Americans immediately,” Treasury Secretary Steven Mnuchin earlier told reporters at the White House.

“I think it’s clear we don’t need to send people who make a million dollars a year checks. But we like — that’s one of the ideas we like. We’re going to preview that today and then we’ll be talking about details afterwards,” Mnuchin said.

The new measures will also include up to 90-day deferrals of IRS tax payments up to $1 million.

Mnuchin also said the stock market will remain open despite the recent volatility, although he said its hours could be shortened if needed.

“Americans should know that we are going to do everything to make sure they have access to their money at their banks, to the money in their 401(k)s, and to the money in stocks,” the Secretary added.

At one point on Tuesday, it was ‘touch and go’ as all three major indexes fell into negative territory within the first half-hour of trading, with the Dow Jones Industrial Average briefly falling below 20,000 points before staging a recovery and closed +5.20%, or +1,048.86 points, higher.

The Dow had recorded its worst day since “Black Monday” in October 1987, as well as its worst “point drop” in its history on Monday.

The S&P 500 managed to climb nearly +5.99%, while the tech-heavy Nasdaq Composite finished +6.23% higher.

Meanwhile, the SPI 200 futures closed at 5,279 and presently points to a rise of +7 points, or +0.1%, at the open.

As for the Australian Dollar, the bears were back overnight, as our local currency hit a fresh near-17-year low of US$0.5958 and is currently buying US$0.5996 (as of writing).

From the technical assessment, the 3-day Relative Strength Index (RSI) lookback is supporting a possible recovery as the indicator slowly climbs out of the extreme oversold territory, with the immediate target holding towards 5,500 to 5,600.

Daily outlook on the benchmark S&P/ASX 200

Yesterday, the bulls came back into the arena stamping their hooves and rising their horns and drove the ASX 200 to its biggest one-day gain on record and reclaimed approximately $100 billion of Monday’s $162 billion losses, after the S&P/ASX 200 recorded its most significant falls in 20 years, with the All Ordinaries Index recorded its biggest fall since the 1987 crash.

The local sharemarket bulls snapped up blue-chip banks, supermarket, healthcare and mining stocks at a bargain, with the last final hour of trade surging of nearly +150 points with the benchmark S&P/ASX 200 closing to +291.4 points gain, or +5.83%, at 5,293.4 points.

Meanwhile, the broader All Ordinaries index was up +274.6 points, or +5.43%, at 5,332.8 points.

The financial sector shined the most after surging +9.2%, the biggest on record, as the “Fab Four” (banks) staged an astounding advance with the Commonwealth Bank surging +13.3% to $67.64, while Australia and New Zealand Bank advance +11.8% to $18.40, with Westpac leaping +8% and NAB climbed +6.8% to $17.21, and Suncorp gained +12.8% to $9.70.

The mining sector rose +9.0% as Titans, BHP gained +11.9% to $28.21, while Rio Tinto gained +6.9% and Fortescue Metals rose +10.8% to $10.69, and Newcrest Mining gained +10.6% to $24.00.

Gold stocks also shined with Northern Star and Regis Resources skyrocketing +19.7% and +18.6% respectively; meanwhile, Newcrest surged +10.6%.

Supermarkets were up, with Woolworths rising +9.7% to $39.85 and Coles gaining +8.4% to $17.22, while Wesfarmers gained +5.9% to $37.96.

Qantas lost altitude and fell -5.3% to a nearly four-year low of $2.86 after slashing -90% of international flights and hauling back on domestic routes.

Beverage bottler Coca-Cola Amatil and aged care provider Estia Health suspended earnings guidance amid coronavirus uncertainty.

Coca-Cola slipped -0.1% to $10.01 while Estia lost -7.8% to $1.18, while Crown slipped -1.7% to $7.16.

Elsewhere, West Texas Intermediate oil prices briefly fell under $US30 a barrel – its lowest level since January 2016, (now lower after the overnight’s session sinks to $27.03).

Meanwhile, Santos said it was reviewing all its capital spending plans considering the collapse in oil prices and will stop all new hiring. Its shares plunged -5.3% to $3.71, while Woodside gave a firmer display and surged +5.2% to $18.90.

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