Australian Equities Likely to Be Noisy

• Australia may be influenced by the United States and the European Union.
• Commodities will be crucial as usual.
• Recent Chinese rate cuts of 10 basis points eyed.
• The “AI trade” seems to be weakening across the board globally.
• There are still plenty of strong companies in Australia.

When you look at the Australian equity market via the ASX 200, the first thing that you will more likely than not to notice is that we are approaching the AU$7900 level. Furthermore, the 50-Day EMA underneath more likely than not will continue to offer some technical support as well, which is currently sitting at the AU$7825 level.

That being said, it’s worth noting that the market has been extraordinarily volatile during the day in the United States and the European Union. After all, the PMI numbers out of various countries, US included, has been a bit of a mixed bag. For example, the Manufacturing PMI numbers in the United States came out lower than anticipated, while the Services PMI numbers came out a little hotter than anticipated. It is because of this that the negativity that we have seen jump into the market in America may be somewhat short-lived.

It’s probably worth noting that in the United States, we have seen a lot of rotation. Traders have stepped away from stocks such as Nvidia and Apple and have started to put money to work in smaller companies as they anticipate that the Federal Reserve could be cutting rates sooner rather than later. In Australia, this could lead to a rotation into some smaller stocks as well, but foreign investment in Australia may pick up as well, suggesting that commodity-based stocks may get a bit of a boost due to the fact that in the United States we have seen the Dow Jones Industrial Average pick up, and most of those blue-chip companies tend to use a lot of commodities.

If we are finally seeing global traders jumping away from the latest “artificial intelligence trade”, we could see Australia as one of the beneficiaries. However, we also have to keep in mind that China recently cut its financing rates by 10 basis points, suggesting that perhaps we have a little bit of trouble in China itself. It is because of this that we will probably continue to see the ASX 200 not necessarily represent sector by sector attitude of Australian equities.

Some Uptrends Continue in Australia

Macquarie Group has been very strong over the last several weeks, and during the trading session on Wednesday, we saw MQG gain 42 basis points. The equity market has been very bullish on the stock, as it has risen all the way from the AU$180 level in the beginning of May to reach the AU$209 region presently.

Rio Tinto bounced slightly during the Wednesday session, as it continues to hang about the AU$112.50 support level. At this point, if the market were to break above the AU$115 level, a bit of follow through could occur as the short covering rally could be in full effect. Keep in mind, Rio Tinto desperately needs commodities to do well in order to be bullish for a sustained move.

Resmed Inc was very bullish during the trading session on Wednesday, gaining 1.38% during the session. This major healthcare stock has been negative for some time now, but the latest move has it threatening the AU$32 level, an area that previously had seen a massive selloff. Breaking above that could have people chasing Resmed going forward as it would be a major breach of resistance.

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