ASX 200 index managed to reverse the early session losses as the index hit the lowest level in the last five weeks and finish just 0.03% lower at 5,926. New restrictions in Victoria and curfews for the next six weeks weighs on investors sentiment, who dumped equities in the first part of the session and more specific travel and entertainment stocks. The fresh restrictions will have a significant impact on Victoria’s economy but will also hit the Australian economy.
Better than expected economic figures from Australia and China lifted sentiment. The Australian manufacturing PMI came in at 53.4, beating the forecasts of 53.4 in July. The AiG Performance of Manufacturing Index climbed rose to 53.5 in July from 51.5. The jobs advertised in July increase by 16.7% following a 42% in June but came below the forecast of a 37% increase.
From China, the Caixin Manufacturing PMI came in at 52.8, topping the expectations of 51.3 in July. The figure shows that the manufacturing sector continues to expand as the global demand picks up. The news is positive for the Australian economy, China’s leading trading partner.
ASX 200 Technical Analysis
ASX 200 in a volatile session managed to rebound from the lowest level since June 30 showing that bulls are still on the game. The rebound today stalled at the 50-day moving average, as traders are still cautious after the new restrictions in Victoria.
Last Friday, the index breached below the 50-day moving average for the first time since May 14. The technical hammer that formed today needs a confirmation tomorrow that will signal a bottom and a trend reversal. What I will be looking for, is a close tomorrow above the 50-day moving average. If the reversal confirmed (a close above 50-day SMA) then the next resistance is at 6,053 the top from July 31. More selling pressure would be met at 6,197 the 200-day moving average.
On the other side, today’s low at 5,860 is the first support. Bearish traders would target the low from June 16, at 5,720. A break below 5,720 might pave the way for 5,607 the 100-day moving average.