dax daily outlook friday 20 nov 10970 key short term support to maintain bullish momentum 1774502015

Chinese markets ended down again but were relatively calmer


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By :  ,  Financial Analyst

Australian stocks had a volatile trading session on Tuesday. The major indices fell sharply during the first two hours of trade on negative cues from the overnight close on Wall Street and a lower open for the Shanghai Composite index, but recouped most of those losses in a mid-session rally. However, a correction in the last two hours of trade forced the indices to close in the red for the day.

Investors continue to focus on the gyrations in the Chinese stock markets. The Shanghai Composite index traded erratically but ultimately lost another 1.68 per cent, on top of the 8.48 per cent slump on Monday.

Indices and sectors

The benchmark S&P/ASX 200 fell 5.2 points, or 0.1 per cent, and closed at 5,584.7, while the broader All Ordinaries index was down 8.2 points, or 0.1 per cent, at 5,571.2.

The top gaining sectors were energy (+0.83 per cent), utilities (+0.35 per cent), healthcare (+0.28 per cent) and financials (+0.03 per cent). The losing sectors included information technology (-1.24 per cent), consumer discretionary (-1.05 per cent) and industrials (-0.66 per cent).

Stocks

Miners had a mixed day. BHP Billiton Limited (ASX:BHP) fell 0.59 per cent to AU$25.37, and Atlas Iron Limited (ASX:AGO) slumped 8.33 per cent to AU$0.0330. Rio Tinto Limited (ASX:RIO), however, gained 0.18 per cent to AU$51.28 and Fortescue Metals Group Limited (ASX:FMG) rose 2.34 per cent to AU$1.75, as iron ore prices ruled steady at US$51.40 a tonne. Copper and gold miner Sandfire Resources NL (ASX:SFR) was the best performer on the S&P/ASX 200, up 3.48 per cent to AU$6.24. On the other hand, Whitehaven Coal Limited (ASX:WHC) was the biggest loser on the S&P/ASX 200, and closed down 5.24 per cent by AU$1.17.

In energy, Woodside Petroleum Limited (ASX:WPL) jumped 1.71 per cent to AU$34.44, Origin Energy Ltd (ASX:ORG) went up 2.69 per cent to AU$11.45, and Santos Ltd (ASX:STO) gained 0.56 per cent to AU$7.13 as oil prices recovered slightly. Oil Search Limited (ASX:OSH) shed 1.24 per cent to AU$7.17. Origin Energy was the fifth biggest gainer on the S&P/ASX 200.

The four major banks showed divergent trends. While Commonwealth Bank of Australia (ASX:CBA) was up 0.30 per cent to AU$86.35 and Australia and New Zealand Banking Group (ASX:ANZ) gained 0.34 per cent to AU$32.22, National Australia Bank Ltd. (ASX:NAB) fell 0.15 per cent to AU$33.86 and Westpac Banking Corp (ASX:WBC) slipped 0.44 per cent to AU$34.21.

Amongst retailers, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, closed higher by 0.15 per cent at AU$41.38 and Myer Holdings Ltd (ASX:MYR) gained 0.84 per cent to AU$1.20. However Woolworths Limited (ASX:WOW) declined 0.22 per cent to AU$27.77, Caltex Australia Limited (ASX:CTX) fell 0.79 per cent to AU$33.80 and Metcash Limited (ASX:MTS) shed 0.47 per cent to AU$1.05.

Economic news, currency and market outlook

The US Fed began its two-day policy meeting on Tuesday, and it is likely that investor attention will shift from Asian markets to signals from Chair Janet Yellen on an interest rate hike.

On Wall Street, stocks closed higher Tuesday, as losses on Chinese stock exchanges moderated and oil prices recovered somewhat, though earnings reports were mixed. The major US indexes broke a five day losing streak. The S&P 500 index added 25.61 points, or 1.2 per cent, to 2,093.25, the Dow Jones Industrial Average   gained 189.68 points, or 1.1 per cent, to 17,630.27 and the Nasdaq Composite Index added 49.43 points, or 1 per cent, to 5,089.21.

The Australian dollar traded higher following the relative calm on Chinese stock markets and a rebound in iron ore prices. At 07:00 this morning (AEST) the local currency was trading at 73.35 US cents, up from 73.15 US cents on Tuesday.

The Australian stock market is likely to open higher today given that at 06:45 am (AEST) this morning, the September ASX SPI200 Index (AP) Futures was up 31 points at 5,573.

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