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Market Brief: Asian Markets and ASX200 Digest Three Month Highs Ahead of Fed

ASX 200
ASX 200

Asian stocks and ASX 200 digest the recent three-month highs and trading mixed ahead of the Fed decision later today. Investors sentiment has boosted by better than expected unemployment data from the USA, that point to a fast recovery of the economy after the coronavirus crisis. Dow Jones ended 1.09% lower at 27.272, the S&P 500 finished 0.78% lower at 3.207, while Nasdaq was 0.29% higher at 9.953. 

Fed Decision Will Drive Markets

Fed will release the policy decision at 18:00GMT followed by a press conference half an hour later. Analysts expect that the Fed will keep interest rates unchanged and will focus on economic forecasts. Fed jumped in with massive fiscal stimulus amid the coronavirus crisis, and Jerome Powell might say that it is too early to withdraw the monetary measures because might threaten the potential recovery.

In economic news, the Japan Machinery Orders came in at -12% below the expectations of -8.6% in April, the yearly reading for the Machinery Orders registered in at -17.7%, below the forecasts of -14%. 

The Japan Producer Price Index was at -0.4% below the estimates of -0.3% in May. 

Fitch Ratings warned that the coronavirus crisis had weakened India’s growth outlook amid growing high public debt. Fitch expects India’s public debt to GDP ratio to rise to 84% of GDP this year, up from the previous forecast of 71%. 

The Nikkei index is 0.29% higher at 23,154. The Hang Seng Index is 0.21% higher at 25,110. The Shanghai Composite index is 0.43% lower at 2,943, while the Singapore Straits Times index is 0.14% higher at 2,798. 

Crude oil price trades lower today after Moody’s Investors Service, revised down the 2020 average price forecast for Brent oil to $35 per barrel and $45 per barrel for 2021. 

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ASX 200 Bullish Momentum Above the 100-Day SMA

ASX 200 is 0.36% higher at 6,166, making fresh three month highs as confidence has been restored by Australia’s success in stopping the spread of COVID-19 and continuing with the gradual reopening of the economy. 

The surveys of consumer confidence released today showed that consumer sentiment declined by 1.3% to 97. The Monthly consumer confidence, however, rises by 6.4% in June to 93.7, returning to pre-coronavirus levels, but remains below the long-run average.

On the technical side, the index managed to break above the 61.8% Fibonacci retracement. Now faces the first resistance at 6,182 the daily high. The next hurdle is at 6,323 the 200-day moving average. On a break higher, bulls will be looking for an extension to 6,514 the high from March 3. 

On the other hand, immediate support for the ASX 200 index stands at 6,089 the daily low. In case of a break lower, bears might test the next support area at 5,933 the 100-day moving average. Next support for the ASX 200 index will be met at 5,821 the June 3 lows.   

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