Technicals | 10:45 AM
Tony Sycamore, Market Analyst, IG shares his technical views on the Nasdaq, ASX200, gold and crude oil.
By Tony Sycamore
Earlier today, Tony Sycamore, Market Analyst, IG updated his views and thoughts on financial markets, including the technical analysis updates below.
First Up, Nasdaq100
From its late-March low of 22,841, the Nasdaq100 launched a powerful 35% rally in just over nine weeks, reaching a record high of 30,762 in early June.
The correction from that high continues to evolve with the Nasdaq100 tagging levels last viewed three months ago.
We are looking for signs of basing broadly in the 28,000/27,800 region with a view that it would set up a retest and eventual break of the 30,762-record high, with scope to extend toward 32,000.
Conversely, a sustained loss of support in the 28,000/27,800 zone would warn that a deeper pullback toward the 200-day moving average at 26,448 is underway.
ASX200
Last month’s (May) CPI report saw annual headline inflation ease to 4.0% year-on-year from 4.2% in April. However, the RBA’s preferred measure, the trimmed mean — rose to 3.6% year-on-year from 3.4% in April.
Consensus expects headline inflation to stay at 4.0% year-on-year in June, with the trimmed mean rising to 3.8%. This would put the all-important Q2 CPI at around 3.7% year-on-year, up from 3.5% in Q1, leaving inflation on all metrics well above the midpoint of the RBA’s 2–3% target band.
An in-line or hotter-than-expected core reading would leave the door open for a rate hike in August, while a softer print of 3.5% or less would help keep the RBA on the sidelines until the September Board meeting.
The ASX200 has been stuck in a broad 8500–9000 trading range since early April, and today it is set to test the top of that range.
In theory, a sustained break above 9020/30 would open the way for a test of the February high at 9202.
However, with the potential for volatility over the next six weeks of reporting season, it’s not a break higher I’m looking to chase at this stage.
Crude Oil
WTI Crude Oil finished lower overnight at US$79.13 (-3.39%) locking in a third straight session of declines that had seen prices retreat around 15% from Friday’s US$93.50 high.
The sell-off reflected relief that the informal pause in US-Iran hostilities was holding, along with hopes that diplomacy might eventually reopen the Strait of Hormuz.
That narrative changed a short time ago. Iran launched multiple ballistic missiles in an attempted surprise attack on a US base in Jordan.
US Central Command confirmed all the missiles were successfully intercepted. WTI promptly jumped 4.50% to US$82.50 as traders began putting some of the geopolitical risk premium back into the market.
The latest attack highlights that two sides remain a long way from resolving the core dispute of passage through Strait of Hormuz that caused the earlier MOU to collapse.
With Hormuz still heavily constrained and neither side showing much flexibility in recent negotiations, this morning’s missile launch raises the likelihood that risk premium rebuilds further — particularly if the US responds in the coming hours as widely expected.
Gold
Gold finished lower overnight at US$4028 (-1.17%), weighed down by the ongoing messy unwind in global tech stocks even as US yields and the dollar retreated ahead of tomorrow morning’s FOMC meeting.
Technically – the rebound from the US$3942 low has been less impressive than we might have expected and carries more corrective than impulsive characteristics, which raises the risk of a retest of that low.
As a result, we are moving back to a more neutral bias on gold and will reassess after tomorrow’s FOMC decision and big tech earnings.
All material has been re-published with permission and does not by association represent FNArena’s views.
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