ASX 200 Index: Falling on tradewars and Business Conditions tumbling

ASX 200 is down by over 1.3% on Tuesday on mixed sentiment with regards to COVID-1, trade wars and fresh Australian data highlighting the impact of lockdowns on the Australian business economy. At the time of writing, ASX 200 is trading at 5,389 and has fallen from a high of 5,461.4 to a low of 5,389.5. 

Firstly, mixed results overnight had the ASX open in a dubious position, wit traders expecting a sell-off. The S&P 500 ended the day with the vast majority of the index down for the day. Tech and health care stocks, however, posted strong gains. Markets are harbouring mixed feelings with nations attempting to end the lockdowns.

China and Australia enter the trade wars

Australia's first tentative steps to lifting coronavirus restrictions will have 250,000 Aussies back to their workplaces and add more than $3 billion to the economy, according to Treasury estimates. However, what markets are more focused on are the risks associated with this to public health. Also, there is a trade spat that is escalating between China and Australia, perhaps in retaliation to Prime Minister Scott Morrison's demand for an independent investigation into the COVID 19 outbreak. In the latest development, China has imposed an import ban on four Australian abattoirs in an apparent escalation of Beijing's trade war tactics – more on this here: Australian beef processors suspended in China trade escalation.

Australian Business Conditions slide deeper into negative territory

In other news weighing, a measure of Australian Business Conditions slid deeper into negative territory in April as sales, profit and employment suffered from coronavirus-induced lockdown. National Australia Bank’s index of business conditions sank to -34 last month, from an already dismal -22 in March. This was far below the long-run average of +6 and worse than during the global financial crisis. However, confidence did bounce somewhat after a record slide in the prior month:

• Australia recorded its largest ever drop in overseas travel in March – ABS

• NAB Business Confidence Index bounces to -46 in April, AUD/USD remains heavy

ASX 200 Index once again failing at familiar resistance

The 38.2% Fibonacci level (5470) remains resilient in trade on Tuesday with the downside helped along for all of the above reasons. The index has been trading between there and the 23.6% Fibo since the end of March. The bears will be looking for an extension below the COVID-19 lows of 4402. However, on a break higher will extend towards a 50% mean reversion at 5794 ahead of a 61.8% golden ration at 6127.