Index sinks, dollar soars
The ASX200 has disappointed for the second consecutive day, sliding near 55 points in an expansive rout.
International equity leads were soft overnight, but with commodity gains and yesterday’s underperformance, the local market was largely expected to bounce back. It hasn’t though. Instead the index headed south, shrugging off a quarterly GDP beat along the way. The selling is widespread, with all major sectors lower, with the exception of the Materials. The Financials are the worst – a consequence of both falling bond prices and subsequent diminished yield appeal, as well as a stronger AUD overnight.
From a charting perspective, the local index sits in a precarious position, right on the verge of breaching the support level at 5575. Traders will be wary, as the next major level is 125 point lower at 5450.
The situation is very different for the local currency. It’s rallied around two US cents over two days on the back of yesterday’s RBA statement, which failed to satisfy the doves, as well general USD weakness. It is currently trading right on 0.78 USD.
For further comment from CMC Markets please call 02 8221 2137.
Frequently Asked Questions about this Article…
The ASX200 index fell due to widespread selling across major sectors, except for Materials. This decline occurred despite a positive GDP report, as international equity leads were soft and the local market underperformed expectations.
The Financials sector was the hardest hit in the recent ASX200 decline. This was due to falling bond prices, which reduced yield appeal, and a stronger Australian dollar overnight.
The current support level for the ASX200 index is at 5575. Traders are cautious as the index is on the verge of breaching this level, with the next major support level 125 points lower at 5450.
The Australian dollar has rallied around two US cents over two days, trading at approximately 0.78 USD. This increase followed the RBA statement, which did not meet the expectations of dovish investors, and was also influenced by general USD weakness.
The stronger Australian dollar was influenced by the Reserve Bank of Australia's statement, which did not satisfy dovish expectations, and a general weakness in the US dollar.
Traders are concerned because the ASX200 is close to breaching its support level at 5575. If this level is breached, the next major support is significantly lower at 5450, which could indicate further declines.
International equity leads were soft overnight, contributing to the ASX200's decline. Despite expectations for a market rebound due to commodity gains, the local market continued to slide.
For further commentary on the ASX200's performance, you can contact CMC Markets at 02 8221 2137.
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