ASX 200 finds resistance at 100-day EMA as mining companies lead

The ASX 200 index rose by more than 70 basis points as the Australian central bank committed to lower interest rates for longer. The index is trading at $5,856, which is a few points below the May’s high of $5,920.

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RBA commits to lower interest rates

The RBA delivered its interest rate decision earlier today. In the statement, the bank left interest rates unchanged as was widely expected. It also committed to scale-up asset purchases if the economy continues lagging. In the statement, the bank said:

“The substantial, coordinated and unprecedented easing of fiscal and monetary policy in Australia is helping the economy through this difficult period. It is likely that this fiscal and monetary support will be required for some time.”

Most companies in the ASX 200, except the banks do well in a period of low interest rates because they pay less money in interest.

Shortly afterwards, ANZ announced that it was slashing the first-quarter GDP estimate from a decline of 0.1% to 0.2%. The bank said:

“The main new pieces of information since then are weaker-than-initially-expected inventories and wages. Government spending, profits and net exports were broadly in line with our expectations.”

Best and worst performing stocks in the ASX 200

The best performing stock in Australia was Zip, the technology firm that offers interest-free loans. The shares rose by more than 37% after it announced it was acquiring QuadPay, an American firm. Investors hope that the acquisition will help it compete more with AfterPay, the big juggernaut. ZIP is not a member of the ASX.

Within ASX, the best-performing stock was Perenti Global, whose shares rose by more than 10%. The company is one of the largest mining services companies in Australia. It was followed by Domain Holdings, Boral Limited, and Iress Limited.

On the other hand, the worst performers in the ASX were Oil Search, Austal, QBE Insurance, Avita Medical, and Pro Medicus limited. All these shares declined by more than 2 per cent.

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ASX 200 technical outlook

The ASX 200 index rose today as investors reacted to the RBA rates decision and the growth of China. On the daily chart, the price is stuck along the 100-day EMA. It is also slightly above the 50-day EMA and along the 50% Fibonacci retracement level. Therefore, a complete break above last month’s high of $5,920 will mean that buyers are in total control and will see them attempt to test the psychological level of $6,000.

On the flip side, a move below $5583 will invalidate this trend. This price is along the 38.2% Fibonacci retracement and is along the 50-day EMA.

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