The ASX 200 index looks likely to break into new high ground for the year as investor confidence returns and markets put concerns over the US Government’s healthcare failure behind them.
Probably the main driver of the current rally is that reaction to the Trump healthcare failure was far more muted than many expected. This has seen money coming back into equities as investors became comfortable that a large sell-off was not about to unfold.
The end of the Trumpcare correction coincided with release of exceptionally strong US consumer confidence data helping to boost markets last night. While it’s possible that US consumer confidence may be tempered a little next month following the Government’s failure to achieve its healthcare reforms, the latest figure indicates a high base for confidence which should help support consumption and US economic growth over coming months
While the US markets set a positive lead last night, traders will be aware that our market pre-empted this with strong gains yesterday. For technical traders, the key question for today will be whether the ASX 200 index can get convincingly clear of established resistance around 5833. If the index only nudges past this level, it will leave open the possibility of a false break and a retreat into the trading range that has held the ASX 200 so far this year.
Insurance companies with exposure to the domestic market like QBE, IAG and Suncorp will be a focus today as the job of assessing the extent of the damage wrought by Cyclone Debbie gets underway
Yesterday’s bounce in commodity prices has seen the Aussie Dollar recover in a move that could be extended if iron ore prices stabilise around current levels for a while.