ASX200 through a fresh 2022 lens

My first day back in the office today since Christmas Eve, which brings with it the benefits of a recharged battery and a fresh lens to view markets.

Australia

It is noticeable that the early weeks of 2022 have seen a continuation of the volatility that marked the final months of 2021. However, net changes across assets classes exhibit significant divergence.

For example, crude oil is trading 13.5% higher than pre-Christmas. At the same time, the S&P500 cash index closed at 4726 overnight, exactly where it closed the morning of December 24th.

The lack of net movement in the S&P500, testament to strong inflows and underlying strength as equity markets shrugged off the release of the Federal Reserve meeting minutes that showed an earlier and faster rate hiking cycle than expected.

Locally the ASX200 is trading about 0.5% higher than its pre-Christmas close, despite the surge in Omicron cases that will weigh on the reopening and Australian growth in Q1 2022.

Preferring instead to focus on higher commodity prices, supported by the dovish shift by the Chinese central bank in early December and as China again turns to stimulus projects to kick start its stalled economy.

In the first two weeks of 2022, China has announced significant infrastructure projects totaling more than 3 trillion yuan ($471 billion). In contrast, only about 1.2 trillion yuan of major infrastructure projects were announced January 1-19 last year. 

Technically, the ASX200 appears very comfortable trading in a holding pattern near the 7400 level that it spent the last three months of 2021 rotating either side of.

For a sign that this is set to change, watch for a break/close below the support provided by the 200-day moving average and the uptrend drawn from the October 5780 low at 7300. Or above the resistance from the August 7632 high.

ASX200 13th of Jan 2022

Source Tradingview. The figures stated areas of January 13th, 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

How to trade with City Index

You can trade with City Index by following these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    Open an account in the UK
    Open an account in Australia
    Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

Disclaimer

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.