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Market Brief: ASX 200 And Asian Stocks Retreat On New Infections Fears

ASX 200
ASX 200

Asian markets ended mostly lower as fear for the second wave of infections rise after Wuhan in China reported five new cases. The second wave of infections would cancel the plans for the reopening and will further damage the global economy. Asian stocks rebounded from March lows on optimism for the upcoming reopening of the economy. Germany reported today 933 new confirmed coronavirus cases and 116 deaths.

Some worries come from the U.S. and China trade relations, while China banned meat imports from Australia as retaliation for Australia’s call to investigate the origins of coronavirus.

Yesterday the Dow Jones finished lower amid pressures on American Express, Boeing and Caterpillar. S&P 500 finished marginally higher while Nasdaq was higher for the sixth consecutive day.

On the data front, the Japan Leading Economic Index came in at 83.8 below the expectations of 91.9 in March. The Coincident Index came in at 90.5, below the forecasts of 95.7. Bank of Japan’s Governor Kuroda reiterated that the central bank is ready to do whatever it can to beat the crisis, cooperating with the Japanese government.

Australia Bank’s Business Conditions came down to -34 for April; the previous reading was at -21. Australia Business Confidence recovered to -46 in April from -66 in March.

Nikkei 225 finished 0.12% lower at 20,366. The Hang Seng Index is 1.67% lower at 24,190. The Shanghai Composite index is 0.34% lower at 2,885. The FTSE Straits Times index in Singapore is 1.05% higher at 2,583. The Aussie ASX 200 index is 1.30% lower at 5,389.

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ASX 200 Test The 50-Day Moving Average

ASX 200 is 1.07% lower at 5,403 giving up all of yesterday’s trading session. The rise in tensions between China and Australia weighs on stocks. The index managed to breach yesterday above the 50-day moving average which for now offers support to the index. The energy sector is down over 2%. Travel and leisure shares are under selling pressure; Corporate Travel Management is 6% lower while Webjet is 8.5% lower. Flight Centre gives up over 7.0%.

On the technical side, the technical picture has improved the last sessions while yesterday’s move above the 50-day moving average formed a positive momentum for the short term. The 38.2% Fibonacci retracement remains a strong resistance.

On the downside, immediate support for ASX 200 stands at 5,374 the daily low. If selling persists the next support area is at 5,170 the low from May 4. Next support to watch on the downside will be met at 5,065 the 23.6% Fibonacci retracement.

On the contrary, first resistance stands at 5,461 the daily high. More offers might emerge at 5,548 the high from April 30. On a bullish breakout, buyers will be looking for an extension to the high from April 17 at 5,565.

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