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ASX falls with Asia markets lower on Powell comments

chart of ASX 200

The S&P/ASX 200 dropped as much as 1.7% on Friday and closed down 1.6% at 7473.30, but flat for the week. Energy and Information Technology sectors lost 2.5% on Friday, the Materials sector dropped 3.3% and Financials lost 1.7%. The NZX 50 closed 0.4% lower.

CMC Markets APAC & Canada analyst Azeem Sheriff has provided technical analysis of the ASX 200 index.

Technical Strategy (22 April 2022) – ASX200 (1-2m forecast – medium term)

Technical Analysis:

ASX 200 Daily Chart

Key Technical Elements
  • Formed a triple top with major rejection of key resistance level around 7,620.
  • Price broke and retested the daily upward trendline.
  • On weekly chart – price had formed 2 hanging man bearish candles following by a progressing major shooting star candle after retesting that key resistance of 7,620.
  • With the uptrend appearing to have finished, now shifting back to a downtrend, I’m seeing price potentially retesting the pivot level (7,320) which also lines up with Support 2 (7,300)
  • Price is also looking at moving back down towards the 100 & 200 EMAs which intercedes with the major pivot level (sign of confluence).
  • I am now seeing a more bearish bias for the next 1-2months (medium term).
  • Price is currently trading in a range and has respected the below key S/R levels over the last 1 year, so good opportunity to look for potential sell opportunities between these levels.

Key Price Levels

  • Resistance 1 @ 7,620 (this a key level around the all time high, if price breaks this, we will need to see a confirmation of some form of retest for continuation upwards)
  • Support 1 @ 7,450 (a break of this will see price potentially reach Support 2)
  • Support 2 @ 7,300 (a break of this will see price potentially reach Support 3) (confluence level)
  • Support 3 @ 7,170 (sitting around the key 61.8% fib level)

Time stamped: 22 Apr 2022 at 10.05am AEST

Source: TradingView

Disclaimer: This is not investing advice and should be read as general information.

Asia markets

Asia markets were mostly in the red throughout Friday, spooked after US Federal Reserve Chairman Jerome Powell said on Thursday that the central bank was committed to hiking rates “expeditiously” to tame inflation.

The Nikkei 225 in Japan led losses among the region’s major markets, as shares of conglomerate SoftBank Group dropped. Bloomberg is reporting exclusively that Softbank expects to retain a controlling stake in Arm Ltd. after the planned initial public offering of the chip business, selling a smaller portion than originally expected, according to people familiar with the matter.

SoftBank opted for an IPO of Arm, which it acquired in 2016, after a plan to sell the business to Nvidia Corp collapsed earlier this year. According to Bloomberg, SoftBank has decided that selling a smaller portion of Arm now, given the current slump in chip stocks, provides the opportunity to get a higher valuation for the remainder later, according to one of the people, who asked not to be identified because the plan isn’t yet public.

China urged some of the country’s biggest investors to buy more stocks, stepping up efforts to stem the market’s slide toward a two-year low, Bloomberg reports

The nation’s securities regulator issued the guidance at a Thursday meeting with investors including the country’s giant social security fund, just as the benchmark CSI 300 Index was sinking toward the lowest level since June 2020. 

Chinese equities have lost about US$2.7 trillion of market value this year as the nation’s strict Covid Zero policies, corporate crackdowns and slowing economic growth spooked investors.

In Australia

Westpac and Nomura expect the Reserve Bank of Australia to lift the cash rate by 40 basis points at its board meeting on June 7. Westpac forecast a substantial lift in annual underlying inflation for the March quarter to 3.4% and a fall in the unemployment rate from 4% to 3.8% in April. Westpac initially forecast the RBA's first increase this year would take the cash rate to 0.25%, from the current record low 0.1%. 

Inflation data is scheduled for release on April 27 and the next RBA board meeting is on May 3, but with Australia heading to vote in a federal election on May 21, no change to monetary policy is expected from the May meeting.

In the US

The Dow Jones Industrial Average fell 1.05%, S&P 500 was down 1.48% and the Nasdaq declined 2.07% on Thursday in the US. US Treasury yields jumped following Powell’s comments. The yield on the benchmark 10-year Treasury note, which started the year near 1.5%, last stood at 2.9095%. European Central Bank officials said they would consider a rate rise as soon as July, sparking a fresh surge in global bond yields.

AUD/USD weaker at US73.41c vs. US73.57c

WTI steady US$103.25 a barrel

Brent crude oil lower US$107.89 vs. US$108.29 a barrel

Spot gold slightly higher US$1954.76 vs. US$1951.35 an ounce

Bitcoin US$40,668 vs. US$40,356

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