Declining commodity prices weighed down Australian shares as the uncertainty around the interest rate hikes in the Oceania region increases and the potential higher-for-longer interest rate from the US’s Federal Reserve looms. The losses experienced in the resources, metals and mining and material sectors ensured a 0.4% decline in the Australia 200 Index Futures (ASX: S&P/ASX 200) in the early hours of trading on Thursday.
The Australia 200 Index futures price continued their slide even though the Private Capital Expenditure figures released this morning show that the expenditure rose by 2.2% quarter-on-quarter, 0.9% more than the 1.3% forecasted. The losses suffered by Rio Tinto also weighed down the index as the global mining group reports a 38% decrease in their profit and more than half their dividends as demand from the Chinese economy slowed.
The futures price action is currently trading at a price level of 7290.00, below the 50-day moving average level of 7356.1. The price action has firmly established a major resistance level at 7422.00 and a major support level at 7228.5 as it continues to reach new lows within the descending channel that the price action has formed. If the bearish sentiment persists, an opportunity exists if the price action moves below the support level at 7267.3, the level of interest for the bears, as it continues its downward trend towards the major support level at 7228.5.
An opportunity could also exist if the price action breaks through the descending channel’s upper trendline to the 7322.2 price level, an initial level of significance for the bulls, towards the next level of importance at 7358.3.
As the market is still pricing in the reports by the US Fed Reserve and the private capital expenditure released earlier today, investors are now looking towards the final European inflation figures and the US GDP figures expected today. With all the upcoming macroeconomic information, an opportunity could exist for a short as the price action moves below the 7267.3 support level to the next support level at 7228.5.
Sources: KoyFin, TradingView, MT Newswire, Reuters.