Australian Equities Continue to Hesitate 

• ASX 200 is still in consolidation. 

• Consumer discretionary a bit flat at the moment. 

• As usual, commodities could lead the way. 

• Major break out from National Australia Bank shows there is some strength in Oz. 

ASX 200 

The ASX 200 was slightly positive during the Tuesday session, but quite frankly still finds itself in a massive consolidation area. The market is completely bifurcated, with certain sectors outperforming others, but none of them being strong enough to drag the index higher with it. It appears that Australia is essentially in a “wait and see mode.” 

With that being said, there are several countries around the world that are cutting rates, and this could lead to more demand for Australian commodities, thereby perhaps putting upward pressure on the stock market over the longer term. In the short term, a few of the major companies in Australia seem to be having different attitudes at the moment. 

Wesfarmers Continues to Grind 

Consumer discretionary giant Wesfarmers continues to grind overall as we are trading near the AU$68 level, but it is worth noting that the market recently had made an attempt to break out to the upside in clear the AU$70 level. On Tuesday, the market was down a little over one half of a percent, as we continue to see a lot of back and forth grind. That being said, it is worth noting that the market is grinding at a very high level after a nice rally. Perhaps traders are starting to attempt to work off some of the excess froth. The 50-Day EMA sits just above the AU$66 level, with the 200-Day EMA parked near the AU$61 level. 

National Australia Bank Breaks Out 

NAB has taken off during the Tuesday session, gaining well over 2%. This is the culmination of pressure on a massive consolidation phase that had been going on for 2 months. The stock closed at the AU$36 level, after gapping higher to kick off the session. Based upon the consolidation phase, the “measured move” could have this market reaching AU$37 rather quickly. 

Support should be seen at the AU$35 level as it was the previous resistance for the rectangle pattern that NAB had been trading in for some time. All things being equal, Australian banks have done fairly well considering that there is so much uncertainty when it comes to interest rates not only in Australia, but globally as well. If the RBA starts to cut rates, that should, at least in theory, allow Australian banks to loan money with a better spread thereby increasing profitability. 

BHP Continues to Probe Massive Support Level 

BHP continues to trade just above a massive support level in the form of AU$42. This is an area that has held true since November 2023. A breach of this level would of course be very negative, but we have recently seen the market bounce from this area to reach the AU$46 level above, and there’s nothing on the chart that suggests things are changing, rather it just looks like a sideways market that has reached the bottom of its overall range at the moment. 

As usual, you will have to keep an eye on copper and other hard assets to get a feel for what the materials sector in Australia may do. Demand for copper may increase based on central banks around the world loosening monetary policy, but that effect has yet to be seen and is still a bit of an open question. 

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