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ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher

ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher

2020-07-28 01:00:00
Margaret Yang, CFA, Strategist
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ASX 200, NIKKEI 225, STRAITS TIMES INDEX OUTLOOK:

  • ASX 200 index may rise after a strong US session, facing key resistance at 6,100 ahead
  • Nikkei 225 index climbed in early hours, which may lead Pacific stocks higher
  • Straits Times index is consolidating at 2,500, waiting catalysts for a breakout

ASX 200 Outlook:

Australia’s ASX 200 (ASX) index stock market benchmark may open mildly higher on Tuesday, according to the futures market. As US technology stocks led a decent rebound in US local equity indices overnight, that may send index futures prices higher across the Asia-Pacific region.

As the ASX 200 index lingered around a key resistance zone in the 6,000 – 6,100 area, with Covid-19resurgence risks serving to contain risk appetite. A strong rally in gold prices this week so far propelled Australia’s mining sector, which gained 1.70% on Monday. Gold mining stocks jumped 4.27% on average.

Sector-wise, materials (+1.57%), consumer staples (+1.14%) and communication services (+1.14%) were outperforming, whereas utilities (-0.71%), healthcare (-0.51%) and energy (-0.37%) were lagging.

ASX 200 Sector performance27-7-2020

ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher

Source: Bloomberg, DailyFX

Technically, the ASX 200 index faces a strong resistance level at 6,100 – the 61.8% Fibonacci retracement (chart below). As the index recovered from March’s lows, it has formed an ‘Ascending Triangle’ on its daily chart. The upper bound of the triangle coincides with the 61.8% Fibonacci retracement, reaffirming this critical resistance. The 20-Day, 50-Day and 100-Day Simple Moving Averages (SMAs) suggest the overall trend remains bullish.

ASX 200 IndexDaily Chart

ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher

Nikkei 225 Index Outlook:

The Nikkei 225 index may open mildly higher on Tuesday, following a strong US trading session led by the technology sector. The upward momentum, however, is perhaps contained by persisting Covid-19 pandemic concerns and a stronger Japanese Yen. As the US Dollar Index fell to a two-year low, the Yen has strengthened to 105.3 – the highest level seen since March this year. A stronger currency is typically not favorable to Japan’s export and tourism sectors.

Technically, the Nikkei 225 index is attempting to break a key resistance level at 22,800 – which is the upper bound of the rectangle shown in the chart below. To attempt higher highs, it also needs to firmly break above the previous high seen in June – 23,300. An immediate support level could be found at 22,400 – the 50-Day SMA.

Nikkei 225 IndexDaily Chart

ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher

Straits Times Index Outlook:

Singapore’s Straits Times Index is consolidating at around 2,500 – 2,600 since last week, likely forming a ‘Double Bottom’ pattern in its daily chart. Second quarter earnings results has been mixed so far. Investors are waiting for results from major blue chip companies this week (chart below).

STI Earnings Calendar – week 27th-31st July

STI Components

Ticker

Date

Event Type

Period

Actual

Estimate

Dairy Farm International

DFI SP

29/7/2020

ER

S1 20

Singapore Airlines Ltd

SIA SP

29/7/2020

ER

Q1 21

(0.397)

Hongkong Land Holdings Ltd

HKL SP

30/7/2020

ER

S1 20

0.18

Jardine Cycle & Carriage Ltd

JCNC SP

30/7/2020

ER

Q2 20

0.18

Singapore Exchange Ltd

SGX SP

30/7/2020

ER

Y 20

0.425

Keppel Corp Ltd

KEP SP

30/7/2020

ER

Q2 20

0.10

SATS Ltd

SATS SP

30/7/2020

ER

Q1 21

(0.008)

Jardine Matheson Holdings Ltd

JM SP

31/7/2020

ER

S1 20

1.68

Jardine Strategic Holdings Ltd

JS SP

31/7/2020

ER

S1 20

Source: Bloomberg, Dailyfx

Straits Times IndexDaily Chart

ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher
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--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

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