- ASX 200 dips below 1% gains made in the first 15 minutes of trade.
- Oil markets unable to keep the enthusiasm going.
- AUD/USD enters the red as Chinese data hits the screens.
Wall Street was revived on Thursday after Saudi Arabia announced a unilateral cut of an additional 1 million barrels per day, sending oil prices higher and lifting spirits. West Texas crude oil rallied 9.5 per cent to $US27.69 a barrel. Financials were also supported on prospects of further stimulus.
- Wall Street Close: Bulls taking back control on optimism in additional stimulus
-
WTI: Bulls capped at fresh highs in $28 handle
However, a more sombre tone could set in as investors set their focussing back on reality. COVID-19 is not going away and trade wars are here to stay as well. US President Donald Trump is adamant that now is not the right time to engage in dialogue with the Chinese President Xi Jinping due to the coronavirus pandemic. Instead, he told Fox Business Network that he is considering cutting ties with the world's second-largest economy.
This comes at the same time as fear grows that China will launch a third economic strike on Australia in response to Canberra’s backing of an investigation into the origins of COVID-19. China has already suspended meat imports from at least four Australian abattoirs amid the souring relations between the two nations. This is a toxic combination that should be weighing more heavily on equity prices, both at home and in the US and China.
China data dump
In more recent news, Chinese data has arrived and knocked the wind out of the Aussie dollar, which is now embarking on 0.6452 as the early Asian made support line.
-
China’s April data dump: Mixed Retail Sales and Industrial Production numbers – Aussie revisits lows
- China (YoY) industrial production ytd (Apr) actual: -4.9% vs -8.4% previous; est. -5.4%.
- China industrial production (YoY) (Apr) actual: 3.9% vs -1.1% previous; est 1.5%.
ASX 200 Index levels
The 38.2% Fibonacci level (5470) holds. 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.
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