ASX 200 index plunged on Wednesday erasing all the gains from the previous two trading sessions. Stocks in Wall Street was under selling pressure led by big tech names such as Apple, Amazon, Facebook, while Tesla gave up over 20%.
Sentiment took a hit after Astrazeneca has placed its coronavirus vaccine trial on hold after an unexplained illness in a participant. Now the company has to review the situation for safety reasons.
Investors ignored better economic data; the Australia Westpac Consumer Confidence jumped by 18% in September to 93.8 from 79.5 in August. Australia Home Loans in July came in at 9.7% beating the expectations of 3.1%.
China announced another upbeat economic figure. China Consumer Price in August came in at 0.4% in line with forecasts while the CPI yearly reading registered at 2.4% also matching expectations. The China Producer Price Index in August came in at -2% but at a modest pace from the 2.4% decline in July.
The energy sector was among the hardest hit after crude oil plunged almost 6% yesterday adding to previous day loses as the transportation oil demand still is far away from the pre-coronavirus levels. Above that Saudi Arabia announced that it is cutting oil prices for October shipments to Asian and U.S. clients.
ASX 200 Analysis
ASX 200 hit the lowest level since June 30 in early trading session and finished 2.15% lower at 5,878. The technical picture has deteriorated after the previous week the index breached below the 50-day moving average.
The correction today stalled at the 100-day moving average. Tomorrow’s session is very critical as if the index breaks below 5,853 – the 100-day moving average – we might see a sharp correction towards 5,769 the low from June 29.
On the upside, resistance stands at 6,007 the daily high and then at 6,041 the 50-days moving average.
ASX 200 Daily Chart