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ASX 200 ends week in a precarious position as Westpac and NAB lag

ASX 200
ASX 200

The ASX 200 index declined by more than 70 basis points as investors braced the new cold war between the United States and China. The index is trading at $5809, which is still close to the highest level since March, before the coronavirus was declared a pandemic.

Australian stocks react to new cold war

Australia and ASX 200 stocks are highly dependent to China. That is because the country ships almost two-thirds of its goods to China. Also, Chinese contribute immensely to the Australian economy. For example, more than 70% of all foreign students in Australia are from China. Therefore, the country and its companies do well when China does well.

Now, a new cold war is brewing between the United States and China. Trump has blamed China for failing to disclose earlier enough about the virus. China has rejected the allegations and demonstrated that it did warn the world early enough.

The most recent cause of tension was because China increased its authority in Hong Kong, the autonomous city that has a special relationship with the US. Today, the US is expected to undo the special relationship, which means that more tariffs will be on the way. In an editorial today, Hong Kong leader, Carrie Lam said that the new laws were welcome and that they will make Hong Kong safer.

All this means that there is a new cold war between the United States and China and Australia could be affected.

ASX 200 best and worst performers

Virgin Money was the worst-performing stock in the ASX 200. The company, which has a market cap of more than $1.6 billion has been in trouble because of weak demand. Its shares dropped by almost ten per cent. New Hope Corporation was another big loser, with its stock falling by more than 8%. Other big laggards were Cromwell Property Group, Scentre Group, and Nufarm. Among the big caps, banks like Westpac and National Australian Bank (NAB) underperformed.

The best-performers in the ASX 200 were Austal, Northern Star, Polynovo, and Silver Lake Resources whose shares rosre by more than 5%.

Biggest ASX news

The biggest news in the ASX 200 was that Lycopodium slashed its full year guidance to more than $11.5 million from the previous $14 million. Also, PAS Group, was put into administration, becoming a major casualty of the pandemic. The company owned several women fashion brands like Review and Yarra.

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ASX 200 technical outlook

The ASX 200 is trading at $5801, which is slightly below the weekly high of $5,923. This decline came as the company formed a reverse hammer pattern yesterday. On the daily chart, it is along the 50% Fibonacci retracement level and along the 100-day exponential moving average. The hammer pattern means that that the index may decline in the next few days as bears attempt to retest the important support at $5583, which is along the 50-day EMA.

On the flip side, a move above yesterday’s high of $5920 will mean that there are more buyers in the market. They will then attempt to test the 61.8% retracement at $6120.

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