Asian Open: Safe-havens thrive during risk-off trade, gold taps 1900

Thursday US cash market close:

• The Dow Jones Industrial fell -622.27 points (-1.78%) to close at 34,312.03
• The S&P 500 index fell -94.75 points (-2.12%) to close at 4,380.26
• The Nasdaq 100 index fell -431.9 points (-2.96%) to close at 14,171.74

Asian futures:

• Australia's ASX 200 futures are down 0 points (-1.19%), the cash market is currently estimated to open at 7,296.20
• Japan's Nikkei 225 futures are down -280 points (-1.03%), the cash market is currently estimated to open at 26,952.87
• Hong Kong's Hang Seng futures are down -37 points (-0.15%), the cash market is currently estimated to open at 24,755.77
• China's A50 Index futures are down -52 points (-0.35%), the cash market is currently estimated to open at 15,045.29

Wall Street was predictably lower as investors reacted to potential that Russia were curating reasons to invade Ukraine. Tech stocks led the declines with the Nasdaq down around -3% and selling into the close. Futures markets point to a weak open today for Asia. The Nikkei is expected to gap lower and it appears increasingly likely that its corrective rally from the Jan low was seen at 27890. Inflation data for Japan is scheduled for 10:30 AEDT.   

ASX 200 scrapes a gain but falters at resistance

Despite a strong start to the day, the ASX 200 handed back most of its earlier gains after failing to hold above a technical milestone (200-day average) and the 7300 handle. We can’t fully blame the three sectors which closed lower, as they only account for around 16% of the index. But what started as a reversal at a likely resistance level morphed into an inevitable selloff as traders reacted to dubious claims from Russian state media of shots being fired by Ukraine, which saw global equity index futures promptly tumble. So in that context, a 0.16% close for the ASX 200 was pretty good.

 

We can see on the ASX 200 daily chart that a bearish hammer formed at 200-day MA and 7340 resistance level. Given the significance of these levels, alongside lower futures and the reversal candle, we have a bearish bias for today. The 200-day eMA and 7200 handle make a viable target, whilst a break beneath 7185 brings 7145 into focus.

 

ASX 200: Market internals

ASX 200: 7296.2 (0.16%), 16 February 2022

• Healthcare (2.97%) was the strongest sector and Consumer Discretionary (-3.37%) was the weakest
• 8 out of the 11 sectors closed higher
• 3 out of the 11 sectors closed lower
• 8 out of the 11 sectors outperformed the index
• 85 (42.50%) stocks advanced, 102 (51.00%) stocks declined

Outperformers:

• +6.65% - Challenger Ltd (CGF.AX)
• +5.69% - Judo Capital Holdings Ltd (JDO.AX)
• +5.05% - CSL Ltd (CSL.AX)

Underperformers:

• -7.48% - Wesfarmers Ltd (WES.AX)
• -6.33% - Novonix Ltd (NVX.AX)
• -6.22% - Domain Holdings Australia Ltd (DHG.AX)

Gold continues to shine

Gold was a clear favourite yesterday and remains highly sensitive to the Russia-Ukraine tensions. It probed 1900 to reach an 8-mont high and is just a day’s trade away from hitting the November high around 1916 using historical volatility and the assumption that bulls retain control.

 

Gold is broadly higher against all FX majors and on the cusp of hitting a 15-month high against the Aussie. We can see on the daily chart that a 3-bar bullish reversal pattern formed (Morning Star Reversal) and the daily chart is within a strong uptrend. Should tensions not escalate further, then we may find that gold does not break out this week. But it is an obvious market for headline traders to focus on around the Russia-Ukraine theme.

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