ASX 200 News Today: Market Rebounds — Will the Recovery Continue on Friday?

The S&P/ASX 200 recovered on Thursday from two difficult sessions earlier in the week. The index gained 0.44% and closed at 8940.3 points. The recovery came on a positive global sentiment following a positive session on Wall Street.

The Dow Jones 30 and Nasdaq Composite rose following the initial shock of geopolitical tensions in the Middle East. The better performance in US equities helped stabilise investor confidence in Australian markets following recent volatility.

Technology and Defensive Sectors Lead the Recovery

Technology shares provided the greatest gains during the session. The S&P/ASX 200 Information Technology Index jumped 4.56% with investors returning to growth stocks.

The rebound was due to improving global risk appetite following Wall Street’s rally overnight. When US technology stocks go up, it affects Australian tech companies because they are closely correlated with global growth expectations.

The chart below shows that the ASX 200 Information Technology Index (XJI) has formed positive price action within oversold zone, which indicates that the technology sector will drive strength in the ASX 200 in the short term.

On the other hand, Healthcare stocks also performed very well and gained 1.92%. Real estate investment trusts followed with a 0.96% rise. Energy stocks added 0.78% with rising oil prices supporting the sector. Financial shares increased 0.76% and consumer staples advanced 0.55%. Communication services and utilities also went higher. These gains across sectors helped the overall index claw back after the heavy losses earlier this week.

Mining and Gold Stocks Lag the Market

Despite the overall recovery in the index, several sectors remained under pressure. Gold shares took the lead in the losses during the session. The All Ordinaries Gold Index dropped another 1.51% as investors pulled back after the big rally experienced earlier. Profit taking and short-term positioning cause pullbacks in gold producers following big moves in the underlying metal’s price.

Mining stocks also weakened during the session. The S&P/ASX 200 Materials Index dropped 0.48% as investors became bearish on resource companies.

The chart below shows that the ASX 200 Materials Index has hit strong support of 24,000 but has not shown any positive reaction. A break below 24,000 will likely indicate further downside.

Despite this correction in the Materials Index, the trend remains strongly bullish but with high volatility. This volatility is seen by the ascending broadening wedge pattern which indicates wide ranges. If the Material Index breaks below 24,000, the ASX 200 will likely show negative price action during the next sessions.

Industrial shares and consumer discretionary stocks dropped slightly. Meanwhile, individual stocks were showing significant moves. Viva Energy Group was the biggest gainer on Thursday with 11.89% to close at $2.07. The strong increase reflected the recent increase in global energy prices that has boosted the outlook for refining and fuel retail businesses.

What to Expect in ASX 200 on Friday

The S&P/ASX 200 now enters Friday on more stable note following Thursday’s rebound. Investors will monitor if the index will be able to hold above 8,900 and extend recovery. Continued strength on Wall Street and stable global sentiment could provide support for another positive session. From technical perspective, the index must break above 200 day SMA at $8,975 to remain positive.

However, weakness in mining and gold stocks may still cap upside if commodity shares are still under pressure. Markets will also respond rapidly to new headlines from the Middle East and oil and gold price movements. If technology and financial sectors continue to attract buyers, then the index could attempt a move higher. Otherwise, volatility could return and hold the ASX 200 in a wide range.