The S&P/ASX 200 had another shot at pushing beyond its record high, but failed just above 7600, closing just off the day's highs, up 0.3% at 7592.80. The Australian dollar is trading around US74.40c.
US futures are higher; markets throughout Asia are mixed. The NZX 50 closed 12 points lower. Japan's Nikkei 225 is up more than 1%, while China's markets are leading the declines.
CNBC is reporting that the US 10-year Treasury yield has risen rapidly to three-year highs, and erased its gap with its Chinese counterpart, something that hasn’t happened for more than a decade.
As the yields cross paths – the US one rising above China’s – Evelyn Cheng reports that the move theoretically reverses an investment strategy that bought Chinese bonds for the greater return they offered relative to US Treasurys.
It’s not immediately clear whether the move is sustained and big enough to have large-scale implications, but the development is a market signal that investors are watching, Cheng comments.
The Japanese yen may continue to see weakness against the US dollar if the policies of the Bank of Japan and Federal Reserve continue to diverge, according to Wells Fargo Securities’ Brendan McKenna. The yen fell nearly 6% against the greenback in March, and is continuing to see losses in April, reports CNBC.
- WTI higher US$104.46 vs. US$102.98 a barrel
- Brent crude oil gaining US$109.41 vs. US$108.02 a barrel
- Spot gold lower US$1953.96 vs. US$1954.07 an ounce
- Bitcoin steady US$41,446 vs. US$41,440
Booming energy markets and production have boosted Santos to record revenue of $US1.9bn in the first quarter of 2022 with LNG prices more than doubling from a year earlier. Shares closed up 1.9%.
In the Materials sector, production at BHP’s WA iron ore operations slipped in the March quarter, shipping 67.1 million tonnes of iron ore from its Pilbara operations. Shipments were down 8.3% compared to the three months to the end of December, but up slightly compared to the March quarter in 2021. Shares closed 2.7% lower.
BNPL player Zip's top-line growth in the third quarter is well below expectations, according to equity analysts at UBS, which has a Sell rating on Zip at a price target of $1. Zip Co announced third-quarter results on Thursday, for the period ending 31 March 2022.
- Group quarterly revenue of $159.2m (up 39% YoY).
- Transaction volume for the quarter of $2.1b (up 27% YoY).
- Transaction numbers for the quarter of 18.3m (up 48% YoY).
- Customer numbers increased to 11.4m (up 78% YoY).
- Merchants on the platform lifted to 86.2k (up 90% YoY).
- Signed key enterprise merchants, including Best Buy and eBay Australia.
- Cash transaction margin was strong at 2.3% (vs 2.1% in H1).
During the quarter, Zip announced the proposed acquisition of US BNPL Sezzle (ASX:SZL). The company said in a statement to the ASX that the transaction is expected to significantly enhance Zip’s scale and offering in the key US market, accelerating growth and delivering significant synergies, which will support the group’s path to EBTDA profitability and positive cash flow during FY24.
AUD/USD technical analysis
CMC Markets analyst Azeem Sheriff is providing technical analysis on the Australian dollar:
FX Technical Strategy (21 April 2022) - AUD/USD (3m forecast)
AUD lifted higher towards 0.7460 overnight and is currently hovering around 0.7434. This move upwards was primarily supported by a weaker USD. No major key events in the calendar today or tomorrow so AUD will take most of its direction from any USD data/events this week.
Early tomorrow morning around 3am, we have the US Fed Chairman - Jerome Powell to participate in a panel discussion "Debate on the Global Economy" presenting at the International Monetary Fund & World Bank Group in Washington DC. This will be a key event for the FOMC meeting to be held on May 4-5 as some observers believe that the FOMC may increase rates by 50 basis points. With inflation being at a 40yr high, we will be watching carefully for any golden nuggets.
Historically, AUD/USD moves in line with FOMC interest rates, so if the rates go up, then more than likely AUD/USD will follow suit. Primary reason for this is strong US rates represents a strong world economy.
3m forecast - 0.76c
Key Technical Elements
- Price trading above the daily pivotal level of 0.74c.
- Rebounded off key daily support of 0.7350
- Bounced off the 50 day moving average which acts as a dynamic support.
- Price respecting the upward trendline with 4 key touches. The trend is your friend so the bias is still bullish until this trendline is broken.
- Overall, price sentiment is still quite bullish on the daily chart and respecting the various S/R lines provided in the chart.
Key Price Levels
- Support 1 @ 0.7350
- Resistance 1 @ 0.7480 (a break of this will see price potentially reach Resistance 2)
- Resistance 2 @ 0.7560 (this will create a double top if price reaches this level)
Time stamped: 21 Apr 2022 at 12.00pm AEST