Asian stocks are trading higher on positive results from the coronavirus vaccine, and expectations for further relief packages from Bank of England, Fed and Europe. Germany and France after two months of negotiations finally announced the creation of a 500 billion euro Recovery Fund to offer support to the countries and regions hardest hit by the coronavirus outbreak. Wall Street rallied on the coronavirus vaccine news and as more and more businesses reopen boosting sentiment for a faster than expected economic recovery.
Trade tensions between China and the USA ignored by traders, but new trade war started between Australia and China after China’s Ministry of Commerce imposed 80% tariffs on Australian barley for five years on anti-dumping grounds. The anti-dumping tariff would be 73.6%, while the anti-subsidy tariff would be 6.9%.
Japan Industrial Production came in at -3.7% in line with expectations in March while the yearly reading the Industrial Production came in at -5.2%. The Capacity Utilization came in at -3.6 below the expectations of -0.2%.
The New Zealand Producer Price Index – Output came in at 0.1% below the expectations of 0.7% in the first quarter. The Producer Price Index – Input registered in at -0.3%, below the forecasts of 0.2%.
Fitch Ratings, in its global outlook, revised down the global GDP estimate for 2020 to -3.2% below the April forecast of -1.7%, the agency now forecasts a recovery of 3.6% in 2021.
Crude oil price trades at two-month highs and the recovery in oil demand also supports sentiment.
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ASX 200 Rallies To Two Month Highs
ASX 200 is 1.81% higher at 5,559, making fresh two month highs. The index boosted by energy stocks as the crude oil price recovers from historic lows. Total payroll jobs in Australia drop by 7.3% from Mid-March to early May, a seven weeks period.
Traders ignored the escalation in trade tensions between China and Australia. China imposed 80.5% anti-dumping duty on Australia’s barley for five-years starting immediately. The Aussie Agriculture Minister said that Australia considers going to the WTO on China’s tariffs.
On the technical side, initial resistance for ASX 200 stands at 5,606 the daily high. The next hurdle is at 5,728 the high from March 12. On the move higher, bulls will be looking for an extension to the high from March 11 at 5,970.
On the flip side, first support for the index stands at 5,460 the daily low. In case of a break lower, bears might test the next support area at 5,325 the low from May 15 trading session. Next support to watch for the ASX will be met at 5,280 the 50-day moving average.
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