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ASX 200 poised to crack 6,000 points - ASX Futures up 73 points

Published 04-JUN-2020 09:53 A.M.


3 minute read

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The S&P/ASX 200 (XJO) stacked on more than 100 points or 1.8% on Wednesday to close at 5941 points, a three month high.

Given the strength in global markets overnight it would appear that we are in for another strong day with the SPI200 Futures index up 73 points this morning to 5999 points.

The negative GDP data released yesterday was already well flagged, and despite its recession implications investors are definitely taking a look through approach, seemingly making assumptions that our economy can recover quickly and strongly as it shakes off the effects of COVID-19.

One of the key factors over the last few days supporting confidence was the imminent release of a stimulus package to kick-start the construction industry.

The Prime Minister has just fronted the media, and the proposed packages that have been discussed in recent days have now been confirmed, another positive catalyst ahead of trading today.

However, in recent days the share prices of stocks leveraged to an increase in building activity have soared, suggesting much of the upside is already factored in.

Despite the positive outlook, the market does appear to be one that has run too hard, too soon and a near-term retracement wouldn’t surprise.

24 hours

Asian markets also traded strongly yesterday with the Nikkei 225 up 1.3% to 22,613 points, and the Hang Seng gaining 330 points to close at 24,325 points.

This is the first time the Nikkei 225 has passed 22,500 points since February, and it is now only 1500 points off its 12 month high.

Despite mass rioting on the streets of London and mainland European cities, the markets were extremely robust, outperforming the gains made in the Asia-Pacific region.

FTSE 100 was up 2.6% or 162 points to 6,382 points.

The DAX surged 3.9% or 466 points, closing at 12,487 points, a level it hasn’t traded at for more than three months.

The CAC 40 gained 163 points or 3.4% to close at 5022 points, a three month high.

US markets continued their strong run with the Dow up 2% or 527 points to 26,269 points.

The S&P 500 gained 1.3% to close at 3122 points.

The NASDAQ gained 0.8% or 74 points to close at 9682 points.

Just prior to the session closing, the index broke through the 9700 point mark for the first time since the coronavirus downturn, and unbelievably it is now only 156 points shy of its all-time high.

With all the planets aligning there was no other way but down for the CBOE Volatility Index, and it is now hovering just above 25 points, once again nearly back to pre-coronavirus levels.

Gold remained out of favour as its safe haven status was no longer sought after, and the precious metal has now fallen by approximately US$50 per ounce to US$1700 per ounce, a level where support has consistently re-emerged when there have been retracements over the last few months.

Oil hit US$40 per barrel for the first time in three months.

Having pushed up above $100 per tonne again, iron ore is sitting tight around that mark.

Base metals were relatively flat overnight, but zinc is edging closer to the high of about US$0.92 per pound that it struck on May 20.

To eclipse that point would be significant as that represented an 11 week high.

The Australian dollar continued its strong surge and it is now trading less than a cent below US$0.70, taking it back to January levels.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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