The Trade: Nasdaq retreats as ASX 200 faces commodity concerns
IG's Tony Sycamore delves into the factors influencing the Nasdaq's retreat and the ASX 200's challenges, including the CPI report, commodity prices, and currency market trends.
(AI video summary)
This video was created on 13 November for IG audiences by ausbiz.
IG's Tony Sycamore provides an analysis on the latest market dynamics as the Nasdaq 100 experiences a slight retreat and the ASX 200 confronts challenges from Chinese economic signals and commodity price fluctuations.
Nasdaq and CPI impact on trading
The Nasdaq has seen a slight retreat, down by about a tenth of a percent, after significant gains. This shift comes as traders await the consumer price index (CPI) report, which could pose upside risks for the market. A potential rise in inflation might lead to repricing in the interest rate market, with ten-year yields testing resistance around 4.5%.
If this level breaks due to a higher-than-expected CPI, yields could climb to 4.75%, impacting equities. Traders might consider taking profits as the Nasdaq consolidates, maintaining support at the 200-day moving average.
ASX 200 and commodity prices
The ASX 200 faces challenges due to disappointing signals from China. A lacklustre stimulus package and weak inflation data have raised concerns about a deflationary spiral affecting resource stocks. Additionally, commodity prices are impacted by a stronger US dollar, creating headwinds for the ASX 200.
The index is trading sideways, unable to break through resistance levels between 8360 and 8380, while support remains around 8100. For clearer market direction, traders should watch for a breakout beyond these extremes.
Currency markets and gold trends
In currency markets, the Australian dollar is under pressure from a strengthening US dollar, trading around 0.6523. This trend is partly due to the recent wage price index report, which showed lower-than-expected growth. As the US dollar continues its upward trajectory, the Australian dollar may face further declines, possibly reaching 0.64.
Meanwhile, gold prices have dropped to a two-month low, influenced by higher US yields and a stronger dollar. Traders should monitor gold's support levels at 2550 and 2500 for potential buying opportunities.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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