6,000 - Today's the day
While there was little news to influence investor thinking in international markets on Friday, ongoing support as investors continue to adjust to last week’s FOMC meeting is driving stock markets higher. The potential for higher interest rates in the US now holds fewer fears for investors as they contemplate a scenario in which there are only marginal increases in rates over the next 12 months.
The strength of buying in major domestic yield stocks like CBA on Thursday and Friday suggests the push to higher prices could well have further to play out. This means that one of the market’s landmark levels, 6000 for the ASX 200 index today, is likely to be exceeded for the first time since 2008 today. Another market benchmark in the form of $100 for CBA also looks a distinct possibility in coming weeks.
While the extent of buying in the big banks and other yield stocks like Telstra, is likely to be the key to how far the market rallies today, there should also be a firm start for gold and energy stocks. Both gold and oil are benefitting from $US weakness following the FOMC meeting.
If the ASX 200 index moves clearly past 6000 then 6180 becomes a possibility. At this level, the rally that began in October would be the same size as the rally that took place between mid-2013 and mid-2014. This equivalence in the size of trends is a common feature in markets. There is also potential resistance form old support dating back to 2007 around this level.
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Frequently Asked Questions about this Article…
The current rise in stock markets is driven by ongoing support as investors adjust to last week’s FOMC meeting. The potential for higher interest rates in the US now holds fewer fears for investors, leading to increased buying in major domestic yield stocks.
Investors are less worried about higher interest rates in the US because they are contemplating a scenario where there are only marginal increases in rates over the next 12 months, reducing the fear of significant financial impact.
The ASX 200 index reaching 6000 is significant because it marks a landmark level that hasn't been exceeded since 2008. This milestone indicates a strong market rally and investor confidence.
Major domestic yield stocks like CBA and other big banks, as well as Telstra, are contributing to the market rally. Additionally, gold and energy stocks are benefitting from US dollar weakness following the FOMC meeting.
If the ASX 200 index surpasses 6000, it could potentially reach 6180. This would make the current rally equivalent in size to the rally that occurred between mid-2013 and mid-2014, a common feature in market trends.
Gold and energy stocks are performing well, benefitting from the weakness of the US dollar following the FOMC meeting. This has led to a firm start for these sectors in the market.
The potential resistance level for the ASX 200 index is around 6180, which corresponds to old support dating back to 2007. This level could pose a challenge for the ongoing market rally.
For further commentary on the market situation, you can contact CMC Markets at 02 8221 2137 for more insights and analysis.
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