ASX 200 Index rallies to highest levels since June, testing the 61.8% Fib

Australian shares have been climbing on Tuesday, scoring the highest levels since mid-June. At the time of writing, the ASX 200 index is trading almos  |  11/08/2020 02:11
  • ASX 200 climbs to resistance last seen in June of this year.
  • Financial stocks and miners are performing well on the session.

Australian shares have been climbing on Tuesday, scoring the highest levels since mid-June.

At the time of writing, the ASX 200 index is trading almost 1% higher at 6170, travelling from a low of 6110.

 A measure of Australian business conditions rose in July as the service sector rebounded from a national lockdown, but confidence was badly hit by a renewed outbreak of coronavirus in the second most populous state of Victoria.

National Australia Bank's NAB index of business conditions bounced to 0 in July, from -8 in June. That was up from a low of -34 in April at the height of the pandemic and nearer to the long-run average of +6.

However, the survey's measure of business confidence fell back to -14 in July, from 0 in June, though it remained well above the April trough of -46.

"Conditions have now recovered to be broadly around their pre-COVID level with improvements across the country," said NAB Group Chief Economist Alan Oster

Financial stocks lifting all boats

Meanwhile, heavyweight financial stocks rallied on the news that the country's second-most populous state-reported a small rise in new COVID-19 infections, lifting investor sentiment.

Australian banks have taken the financial sub-index.AXFJ higher by 1.2% to its highest since July 30.

Reuters reports that daily infections in Victoria peaked at 725 on Aug. 5 and have been trending lower in recent days, following the imposition of a hard lockdown in Melbourne on July 19.

The Commonwealth Bank of Australia CBA, which is slated to report is annual results on Wednesday climbed 1.7%, while the rest of its "Big Four" have added between 2% and 2.3%.

Miners follow in suit

Mining stocks.have also climbed 0.8% with the world's fourth-largest iron ore miner, Fortescue Metals Group FMG, adding nearly 2% to hit a record high after it won a tender to supply Chinese steelmaker HBIS Group.  

Industrial metals were also stronger, with copper and aluminium leading the sector higher.

The prospects of additional stimulus packages helped support sentiment in commodity markets.

Nevertheless, we have seen some sectors struggling to keep their head above water. Precious metals ended lower, with gold falling. 

ASX 200 levels

The index is now at a crossroads in the 6170s where it meets daily and weekly resistance at the 61.8% Fibonacci retracements of the 2020 sell-off. 

6055 is ket support here. However, a break back below the 20-week moving average would open the case for a continuation to the downside. 

 

 

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