- Australian shares hold onto strong gains on lockdown optimism.
- Energy, consumer discretionary and industrials have been the top performers.
Australian shares have started out the week on the front foot as investors are cheering Government’s of various nations worldwide who have plans to reopen their economies and slowly decrease the coronavirus restrictions over various stages. At the time of writing, ASX 200 index is trading over 1% highs to 5,454 the high.
Energy, consumer discretionary and industrials have been the best performing sectors at the start of the week and was buoyed by a positive close from Wall Street on Friday. Some of the best performings in Australian stocks have included retail stocks like Myer (+13.8pc) and Mosaic Brands (+24.8pc), which owns the Noni B, Millers and Rockmans brands. The travel site Webjet (+12pc), as well s Macquarie Group (+3.8pc), Qantas (+2.5pc) and BlueScope Steel (+2pc) all performing well also.
Investors shrugged off the worst job figures since the Great Depression
Investors shrugged off the worst job figures since the Great Depression and instead focussed in prospects of businesses going back to work. US Non-Farm payrolls for April fell -20. 5 million. This was a touch better than the -22.0m expected – but still easily the worst in the 81-year history of the series. “The unemployment rate rose from 4.4% to 14.7% (16% expected), while the participation rate fell from 62.7% to 60.2%. The seemingly odd result of a rise in average hourly earnings of 4.7% for the month was due to low-paid jobs disappearing, leaving the average elevated,” analysts at Westpac explained. Nevertheless, the Dow Jones jumped 455 points (+1.9pc), while the S&P 500 and Nasdaq lifted by at least 1.6 per cent each.
ASX 200 Index headed for a test of the 38.2% Fibo resistance
The 38.2% Fibonacci level (5470) has been tested on a couple of occasions and has proven resilient. The index has been trading between there and the 23.6% Fibo since the end of March. The bears will be looking for an extension below the COVID-19 lows of 4402. However, on a break higher will extend towards a 50% mean reversion at 5794 ahead of a 61.8% golden ration at 6127.