CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

ASX200 rides another wave higher

November 9, 2020 10:50 PM

Providing further research confirms the vaccine is safe, the companies will seek emergency use authorisation by year-end, before a potential rollout in 2021. Offshore equity markets for the better part reacted positively. In the interest rate space, U.S. 10yr bond yields rallied 10.5bp, to 0.92%.

The rally in bond yields explaining why the interest rate sensitive NASDAQ bucked the trend to finish the session -2.16% lower. On the other hand, higher yields the catalyst for the European Banks Index to breathe a sigh of relief and finish up over 12% on the day.      

A move that is being partially replicated in Australia today. The “Big 4” Australian banks that make up about 20% of the ASX200 are trading ~5.50% higher at the time of writing. Also helping the ASX200, a rise in the NAB business confidence index to its highest level since May 2019 in response to the emergence of Victoria from lockdown and falling COVID19 case numbers.

All of this has provided further support to the idea on the ASX200 contained in our last article here where we suggesting adding to core long ASX200 positions in expectation of a test and break above 6200.

With the break above 6200 now cemented, it's an opportune time to return to the chart of the ASX200 from 2017 to gauge how far the rally can run.

In 2017, after breaking out of the top of a five-month range, the ASX200 rallied almost 5% in just under one month. If similar were to occur in 2020 it would project a move towards 6500 by Mid-December, about the time the Santa Clause rally kicks in!

In a nutshell, providing the ASX200 holds above support, formerly resistance 6200/6150 area, supported by a rotation back into the banks, the prognosis for the ASX200 remains bullish into year-end with potential towards 6500 and then 6800.

Source Tradingview. The figures stated areas of the 10th of November 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024