ASX200 stalls ahead of NAB business confidence data
Tony Sycamore August 9, 2021 6:06 PM
Following two large M&A deals at the start of last week, the ASX200 has enjoyed a cracking start to August, finishing the first week of the month with a 2% gain, putting year-to-date performance at 16.4%.
An impressive performance despite an ongoing six-week lockdown in Greater Sydney and lockdowns in Victoria and Queensland, the effects are likely to be viewed tomorrow in the release of the NAB Business Survey.
Last month the business conditions component of the NAB Business survey fell to +24, from May's record high reading of +36. The decline was broad-based across segments, capturing Melbourne's snap lockdown in early June but predating Sydney's current lockdown.
Due to Sydney's extended lockdown and rising price pressures, the expectation is for business conditions to fall again to +10 when the data is released tomorrow at 11.30 am.
Also likely to influence the near-term direction of the ASX200, the release of earnings reports over the next three weeks, and how much further iron ore prices fall in the near term.
Further to the last point, China trade data over the weekend showed that Chinese demand for iron ore fell again in July, with imports at their lowest in 14 months. At the same time, combined iron ore exports from Australia and Brazil have surged partly due to Brazilian powerhouse Vale lifting supply back towards pre-Covid levels.
Iron ore prices have fallen by ~20% in the past three weeks, from $220 p/t to $170 p/t, a move that has weighed on the prices of the big miners. BHP is now trading about -5.50% below its July high, with FMG over 15% below its July high.
Technically the ASX200 today formed a daily Doji candle, very close to the top of 6-month trend channel resistance at 7600, a sign the strength of the uptrend is waning.
As a result, we would be very cautious about chasing the rally at current levels and prefer to buy a pullback leaning against trend channel support near 7200.
Source Tradingview. The figures stated areas of 9th of August 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.