Stock markets bounced sharply this week on the back of reassurances by central banks globally that they will keep the stimulus tap running at full throttle and some surprising Chinese CPI data that revealed inflation remains in check, which provided support for commodity prices. The US markets have made new all-time highs and the Japanese market is up 55 percent from its November lows, while in Europe the markets rebounded.
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The Aussie market has rebounded strongly this week as the materials sector surged, after commodity prices rebounded off key support levels. The market is trading at the mid-point of its trading range of the past two months. The ASX recovered from three weeks of selling in a “risk-on” move and resumed its consistent string of gains. It has now been up for fifteen of the past twenty weeks, with the All Ords back around the 5000 level.
The ASX200 market is up 2.6% this week and has broken through the 5000 level near-term. The main driver has been the news out of Japan regarding aggressive stimulus, Chinese data and the optimism ahead of the US reporting of corporate earnings which starts in earnest next week.
The Aussie jobless rate rose to 5.6 per cent in March, its highest level for 3½ years, following a surprise leap in employment last month. This sparked optimism that the RBA will still need to cut interest rates further.
Key levels for the ASX200 index next week will be 4930 and 5070, with 5000 the key near term pivot level. Volatility is easing and is still cheap, affording cheap protection for your portfolio. We have rebounded back above the 13 and 50 day moving averages, and these will need to hold as support for the positive momentum to continue near term.
ASX sectors all traded higher, with the property sector breaking to new 4½ year highs and the telecom sector just shy, even the materials sector managed to bounce for the first time in 7 weeks.
Protection is still relatively cheap and investors can have cheap insurance for their portfolio and could look to put their money to work, while reducing their risk by using options and warrants strategies.
Remain attuned to the news from overseas, particularly from the eurozone (stimulus), China (stimulus) and the US (corporate earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices.
Contact me at D2MX Advisory on 1300 610 024 and we can help you trade using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.
This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
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