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ASX 200 DROPS ON VIRUS FEARS; RBA DECISION AWAITED - Capital Street FX

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    • ASX 200 DROPS ON VIRUS FEARS; RBA DECISION AWAITED
03-Feb
19:15 IST

ASX 200 futures are currently trading at 6847-higher by 0.13% as compared to the previous closing. The contract, however, closed in the negative territory in the last trading session.

In the Cash Markets, the ASX 200 lost 1.34% to close at 6,923.30 on Monday. The benchmark index dropped to three-week lows during the session.

The ASX 200 fell today as concerns about the global economic impact of the new coronavirus outbreak in China reduced risk appetite and spurred a wider sell-off in the global markets.

The People’s Bank of China said on Sunday that it would inject $173.81 billion into the markets as it ramps up nationwide fight against coronavirus that is expected to hit growth.

Energy stocks declined to a more than two-month low today. A drop in oil prices and a 7.18% fall in stocks of Oil Search weighed on the sub-index. Index components Worley Limited and Beach Energy plunged 8.46% and 5.62% respectively on Monday.

Stocks of Oil Search fell today after talks on the P’nyang gas project between Exxon Mobil and Papua New Guinea collapsed.

Index heavyweight financial stocks lost more than 1% on Monday. Index components Westpac Banking Corp and Commonwealth Bank of Australia declined 1.23% and 0.83% respectively on Monday.

Gold miners rose today due to safe-haven bets amid high volatility in stock markets.

Material shares underperformed today. Heavyweight miners Rio Tinto and BHP Group fell 1.93% and 2.92% respectively.

Traders now await the Reserve Bank of Australia’s interest rate decision scheduled for Tuesday. No change in policy is expected and Interest rates are expected to hold at a record low of 0.75%.

On the economic front, Building Approvals (MoM) for December released earlier today came in at -0.2%. Approvals were above the market expectation of a fall of 3.0%.

On the technical front, the RSI is currently at 45.49% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is below the middle line of the Bollinger bands and is heading downwards.

Overall Bias is Negative and short-term trades can be initiated with below mentioned Stop Loss and Profit targets.

 

Trade Suggestion- Limit Sell At 6855 Take Profit At 6815 Stop Loss At 6875

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