Thu, Jan 27, 2022 @ 15:19 GMT
HomeContributorsFundamental AnalysisAustralia: GDP Upgrades Provide Support For ASX200

Australia: GDP Upgrades Provide Support For ASX200

The latest US stimulus package, worth slightly over 8% of US GDP, returns to the House on Tuesday for final approval and is likely to be signed off by President Biden shortly after.

Its key features which include a $1400 payment for individuals with incomes of $75,000 or less ($150k for couples) are expected to see US GDP growth rise to 7% this year, the highest rate since 1984. Within that, Q2 2021 GDP is expected to rise by `11%, the biggest single quarterly rise since 1978.

Reinforcing the rapidly improving global economic outlook, Westpac’s respected Chief Economist, Bill Evans today raised his Australian 2021 GDP growth forecast from 4% to 4.5% following last week’s stronger-than-expected Q4 Australian GDP print.

Although the better GDP number reflects a broad-based recovery, it was consumer spending that provided the majority of the beat. This should ensure that another strong consumer sentiment survey (already near-decade highs) is released on Wednesday, as households draw on their large pile of accumulated savings.

The stronger Australian GDP profile is supportive of the ASX200. Additionally, the ASX200 is likely to weather a continued rise in global yields better than other countries’ tech stock heavy indices. As noted previously, higher yields are supportive of the bank and resource stocks that are well represented in the ASX200.

Technically, the ASX200 continues to trade in a choppy fashion, within a well-established uptrend channel. An environment that is suitable for short-term traders, not so good for traders that prefer trending markets.

Trend channel resistance is currently coming in near 7000, where short-term traders may look to short the market in anticipation of lower prices to rebuy. Trend channel support is viewed 6660 area, where short-term buyers are expected to emerge in anticipation of further range trading ahead.

Forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Featured Analysis

Learn Forex Trading