Earning Season in Full Swing

 

US equities edged higher on Monday, with the S&P500 closing 2.82 points up (+0.12%), while the Dow Jones added 29.24 points (+0.13%) to close at 21,703.75. Looking at the local market, and the ASX200 has started the week trading lower, with the Index declining 21.26 points (-0.37%) to finish at 5725.85. As can be seen on the daily chart below, the price is back within the middle of a well-defined trading range, with resistance located in the 5800 to 5840 region, while support is at 5660 to 5640. Volatility continues to contract, which can often be a precursor to a breakout and period of trending prices. Given that momentum has really slowed, evident by the ASX200 trading sideways for much of this year, a break of support would likely lead to a test of the 5400 level. The Bulls need to see a strong close above 5840 to confirm that the broader uptrend is set to continue.

 

 

Earnings session in Australia is in full swing, with many companies due to report this week. On Monday, much of the attention was on Bluescope Steel (BSL) who announced a double dose of negative news, being that competition and power prices were set to hurt profits, and that the long-serving CEO Paul O’Malley would retire. Investors were clearly unimpressed by the news, with the share price closing 21.80% lower at $11.03. The stock closed last week at $14.11. Despite the savage sell-off, the price remains 26% higher than 12 months ago.

Notable companies due to release earnings today include BHP Billiton (BHP), Monadelphous Group (MND), Northern Star Resources (NST), Oil Search (OSH), and Sydney Airport (SYD).

The Aussie dollar is finding buyers at current levels, to close on Monday night at US$ 0.7940. After starting the month a little softer, buyers have moved back in, with the price currently consolidating below big resistance at US 80 cents. If the price can continue to trade sideways below this level for the next few weeks, then any further rally attempt back to that level has an increased likelihood of leading to a sustained break higher.

In overnight futures markets, the ASX SPI200 lifted 4 points, suggesting a slightly firmer start to our trading day on Tuesday. 

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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.