ASX 200 cruises above key resistance as BHP share price soars

ASX 200 index rose by almost 2% as investors cheered the expected recovery as the world reopened. The index was mostly boosted by commodity companies like Skycity entertainment, Pilbara Minerals, Adibri, and New Hope. Among the big names, BHP was the best-performing company today.

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BHP share price jump

BHP share price rose to $24 in Australia as the market reflected on a positive note sent by Morgan Stanley analysts. By topping $24, the shares have gained by more than 50% since they bottomed in March. Analysts at the bank said that the company will do well mostly because of its iron ore business, which accounts for about 30% of operating assets.

They expect that demand from countries like China will continue to rise. Also, they believe that BHP offers better cash flow than Rio Tinto.

BHP share price has also been boosted by the surging metal prices. For example, copper price has moved from about $2.35 to the current $2.48.

The analysts expect BHP shares to reach $35, which will be a 45% gain from the current level.

ASX 200 rises as JP Morgan assess Australian GDP

The ASX 200 also rose after JP Morgan released a note on the Australian economy. While data released earlier today showed that Australia contracted in the first quarter, they expect that that the Q2 contraction will not be as deep as previously expected. They noted that:

 “What’s clear is that households already began tightening before the income/jobs shock had really taken hold, and also before government support had hit full stride.”

Previously, the analysts were expecting thee economy to contract by 10% in Q2.

Technology sector in ASX does well

Another catalyst that pushed the ASX 200 today was the tech sector. Although relatively small, the sector did well because of a deal that was announced on Sunday. In the deal, Zip announced that it was acquiring another American company as it tries to compete with AfterPay. AfterPay shares have risen by more than 456% from its March low while Zip shares are up by 323% in this period.

Notable gainers and laggards in the ASX 200

The worst-performing stocks in the ASX 200 were Silver Lake Resources, Regis, Saracen Mineral, Northern Star, and Gold Resources, whose shares declined by more than 5%. On the other hand, the best performers were Skycity, Pilbara, Unibail Rodemco, and Qantas.

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ASX 200 technical outlook

The ASX 200 is trading at $5936, which is an important resistance level because it was the highest level on May 28. On the daily chart, the price is above the 50-day and 100-day exponential moving averages while the momentum indicator has remained above the neutral line of zero. Also, the price is slightly above the 50% Fibonacci retracement level. Therefore, by passing this resistance, it means that bulls will now target the 61.8% retracement at $6140.

On the flip side, a move below $5617 will invalidate this prediction. This price is along the 50-day exponential moving averages.

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