Technical Analyst, Saxo Bank Group
ASX 200 has found support just above the 6,700-mark bouncing towards resistance at 6,962. A resistance that could prove too strong to break and ASX is likely to resume its down trend. The 100 SMA is coming down providing some resistance but the 55 SMA is rising providing support. We could see ASX being range bound between 6,700 and 6,962 for the next few days maybe 1-2 weeks before a break of the band.
If closing above 6,962 a move to around 7,100 is likely. A close below 6,719 bear trend will resume and this was merely just a correction.
The weekly chart supports the bearish outlook. Two weeks ago, ASX formed a Hanging Man candle followed by heavy sell off. The fact that ASX couldn’t even test the 0.618 retracement at 7,110 before sellers took back control is a sign of weakness.
If weekly RSI closes below 40 selling the bearish trend could pick up pace.
2024: The wasted year
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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