ASX 200 Forecast: Miners Cushion Weak GDP

Miners and Banks Do The Work

From the heat map we see BHP (+2.43%), Rio Tinto (+1.62%), ANZ (+1.94%), CBA (+1.08%), WBC (+0.73%) and NAB (+0.59%) posting positive returns to get the ASX 200 Index up over 0.50% on the trading session. Furthermore uranium and base metals are adding an extra punch with NexGen Energy up 9.37%, Alcoa up 5.97%, Northern Star up 3.23%, and NextDC up 4.07%. Uranium stocks rallied after Urenco USA announced a major enrichment capacity expansion, while base metals strength helped Alcoa, BHP and Rio.

On the downside Xero declined 3.54%. Looks like some gains were being taken. JB Hi-Fi was down 3% as consumer discretionary names struggled after wage cost and consumer weakness concerns.

BHP, Rio and Banks Cushion The ASX 200 Index

Australia Economy Slows

Australia’s GDP came in at 0.3% QoQ, missing the 0.5% forecast and slowing sharply from the 0.9% prior. Growth is cooling, households are still under pressure, and the economy isn’t giving the ASX 200 Index a strong domestic demand story to lean on.

GDP Miss Adds Macro Pressure

Industrial Weakness Stays Deep

The Ai Group Industry Index printed -26.5, slightly worse than the prior -25.5 and that keeps the Australian industry firmly in contraction territory. This reading tells us that demand margins, orders, and confidence are still under pressure across industrial activity.

Industry Index Remains In Contraction

Australian 10-Year Yield Continues Basing

Australian 10-year yields seem to be basing before a move higher, probably to retest the 50-SMA. The Z-Score SMA is trending higher as well as the RSI, exhibiting bullish divergence. Yields are still below the 21-EMA (although now testing them) and the 50-SMA while the Supertrend is flipped to negative. Nonetheless, yields are still above the long term SMA.

Australian 10-Year Yield Rolls Over

ASX 200 Index Bulls Recover But 8,800 Still Matters

The ASX 200 Index is building up to test the 8,800 level although I’m seeing some red bricks. It’s still above the 500-SMA though. It took a while to get back above there. It’s also above its 21-EMA and 50-SMA with a green Supertrend. Only thing is that the momentum is slowing down with the RSI pointing lower despite being above 50 and the Z-Score SMA has started to turn lower as well.

ASX 200 Index Renko Tested 8,800 Resistance

Current Trend Direction: Bearish

Bias: Negative

Support Levels: 8,255

Resistance Levels: 8,800, 9,230

Medium Term Path: My view is that the ASX 200 Index will continue to consolidate around the 500-SMA, building momentum higher. Confirmation would be granted once the Index crosses back above the 8,800 level.