Asian Open: AUD/NZD breaks trend support, China’s LPR at 12:15

US Friday close:

• The Dow Jones fell -232.82 points (-0.68%) to close at 34,079.18
• The S&P 500 fell -31.39 points (-0.72%) to close at 4,348.87
• The Nasdaq 100 fell -162.193 points (-1.14%) to close at 14,009.54

Asian Indices:

• Australia’s ASX 200 index closed at 7,221.70 on Friday
• Japan's Nikkei 225 index closed at 27,122.07 on Friday
• Hong Kong's Hang Seng index closed at 24,327.71 on Friday
• China'sA50 Index closed at 15,192.66 on Friday

European Friday close:

• UK's FTSE 100 index fell -23.75 points (-0.32%) to close at 7513.62
• Europe's Euro STOXX 50 index fell -38.91 points (-0.95%) to close at 4074.28
• Germany's DAX index fell -225.12 points (-1.47%) to close at 15042.51
• France's CAC 40 index fell -17.19 points (-0.25%) to close at 6929.63

Wall Street continued lower on Friday amid rising geopolitical tensions between Russia and Ukraine, although volatility was a tad lower than its previous session. The S&P 500 closed beneath its 200-day eMA for a second day yet held above a series of spike lows which formed on the index in January. From a technical perspective its possible we may form a similar volatile low, especially since the US have said they will not be sending in troops bid begin throwing the inevitable ‘sanctions’ word around.

ASX 200: All sectors lower on Friday

All sectors were in the red on Friday with utilities leading the way lower with a -4.1% selloff. Yet with bears seemingly losing steam during Friday’s Wall Street session then we’re not convinced it will be an overly bearish day for the ASX 200 today. Besides, it is trading around its 200-day eMA which are generally tough levels to crack, at least on an initial attempt. We’d likely need to see a break beneath the 7145.7 low before expecting bearish momentum to accelerate, and it is possible we could see the index remain in the choppy range of 7185 – 7340 it has been confined within for the best part of the last two weeks.

 

 

ASX 200: Market internals

ASX 200: 7221.7 (-1.02%), 18 February 2022

• Materials (-0.17%) was the strongest sector and Utilities (-4.07%) was the weakest
• 11 out of the 11 sectors closed lower
• 7 out of the 11 sectors outperformed the index
• 60 (30.00%) stocks advanced, 125 (62.50%) stocks declined

Outperformers:

• +18.45% - Magellan Financial Group Ltd (MFG.AX)
• +5.71% - Netwealth Group Ltd (NWL.AX)
• +3.97% - Whitehaven Coal Ltd (WHC.AX)

Underperformers:

• -4.13% - CSL Ltd (CSL.AX)
• -2.32% - Macquarie Group Ltd (MQG.AX)
• -2.66% - Xero Ltd (XRO.AX)

China’s LPR in focus at 12:15

Geopolitics are likely to remain a key driver this week for global markets, although we do also have flash PMI’s and China’s prime loan rate decision today in Asia. The PBOC (People’s Bank of China) have cut their 1-year LPR at two consecutive meeting, but they also cut the 5-year LPR last month to help boost the economy. China’s equity markets rallied on the day, and today at 12:15 AEDT we find out whether more stimulus will be provided.

AUD/NZD breaks trend support:

We’re keeping an eye on AUD/NZD for a potential short as it closed beneath trend support and its 20-day eMA on Friday. A couple of Doji’s appeared at the top of its trend whilst prices were diverging with its 14-day RSI, and the trend itself hasn’t seen much of a correction this year.

Prices have opened back above the 20-day eMA, but if they remain beneath the broken trendline and Friday’s high (1.0745) then a break beneath 1.0700 could be used as confirmation that a correction is underway, and we would target 1.0650 near the 50-day eMA and 1.0640 swing low.

Gold shined for a third straight week

Gold rallied for a third consecutive week yet 1900 proved too good a level to break. And as Friday produced a potential reversal candle then an initial move lower seems plausible, especially if things don’t actually kick-off today in Ukraine. But with geopolitics at the forefront of everyone’s mind and momentum favouring gold bugs, it is difficult to create a compelling case for bears just now and any move lower is more likely to be supported by dip buyers, on the hunt for a bargain.

 

 

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