AUS 200 Index Climbs Above 7300.00 Mark Supported By Positive Mood Around Wall Street

• AUS200 Index extends the modest overnight rebound from the vicinity of $7240.4 to trade 0.29% higher on Friday afternoon
• U.S. Jobless claims unexpectedly fall, giving further evidence that the U.S. labor market remains tight 
• Australia Q4 private capex rises more than rstimated, in turn, offers some support to the AUS200 Index
• The AUS200 index was supported on Friday by gains in technology, transport, and financial stocks

AUS200 Index extended the overnight rebound from the vicinity of $7240.4 and gained positive traction on Friday, snapping a three-day losing streak underpinned by a generally positive mood around wall street.

The AUS200 index added 20.8 points or 0.29% higher to trade at $7300.8 on Friday afternoon trade heavily supported by the positive lead from wall street on Thursday amid resilient U.S. economic data and as traders await Feds preferred inflation gauge (PCE) for clues on the Fed's tightening campaigns. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to a persistently tight labor market. This could force employers to raise wages to attract and keep staff, adding to further inflationary pressure in the world's largest economy. This further fuel fears that the Federal Reserve could raise interest rates higher than anticipated. Those worries were amplified by other data on Thursday showing inflation was much stronger than initially thought in the fourth quarter, which raises the risk of higher readings when the government publishes January's consumption expenditures (PCE) price data later today.

That said, The number of Americans filing for unemployment benefits had fallen by 3,000 to 192,000 in the week ending February 18th, below market expectations of 200,000, according to data released Thursday by the U.S. Department of Labor.

The jobs report came a day after minutes from the Federal Reserve's last meeting showed that policymakers largely agreed to keep raising interest rates to bring inflation back down within target. Additionally, the Fed's minutes came days after a slew of data from the world's largest economy in recent weeks pointed to a still-tight labor market, sticky inflation, robust retail sales growth, and higher monthly producer prices raising market expectations that the U.S. Central bank will stick to aggressive interest rate hikes to tame inflation in the U.S. Lifting the AUS200 index was also the news that Australia's total new capital expenditure rose by 2.2 percent quarter-on-quarter in the three months to December 2022, topping market forecasts of 1.3 percent and accelerating from an upwardly revised 0.6 percent growth in the previous period. This was the steepest increase in private capital spending in a year, as buildings and structures investment quickened (3.6% vs 2.3% in Q3).

That said, the AUS200 index was supported by technological, transport, and financial stock gains amid weakness in mining and gold shares. Brambles Ltd (Sydney: BXB) led the list of top gainers after it jumped 8.53%/1.01 points to trade at $13.080 per share. Bega Cheese Ltd(Sydney: BGA) followed second after it added 6.78%/0.22 points to trade at $3.54 per share. Star Entertainment Ltd (Sydney: SGR) came in third after it gained 6.79%/0.1 points to trade at $1.5 per share.

On the other hand, Omni Bridgeway Ltd (Sydney: OBL) led the list of top losers, which lost 17.91%/0.65 points to trade at $2.98 per share. EML Payments (Sydney: EML) followed second after it shed 9.48%/0.06 points to trade at $0.53 per share. Perpetual Ltd (Sydney: PPT) came in third after it declined by 5.20%/1.35 points to trade at $24.60 per share.

That said, the ASX200 is still pointing to a 0.6% fall, which would be the third straight decline, due to uncertainty regarding the future path of U.S. interest rates, concerns over Australia's stubbornly high inflation and weak consumer mood.

Technical Outlook: Four-Hours AUS200 Index Price Chart

From a technical standstill, the price extended the modest rebound from the vicinity of the $7240.4 level. Some follow-through buying would uplift spot prices toward retesting the key resistance level plotted by a downward-sloping trendline extending from the early February 2023 swing high. If the price pierces this barrier (bullish price breakout), buying interest could gain momentum, creating the right conditions for an ascent toward the $7337.5 resistance level en route to the $7365.9 technically strong level (200 EMA). If buyers break above these barriers convincingly, it would negate any near-term bearish outlook and pave the way for additional gains around the AUS200 Index.

However, the technical oscillators on the four-hour chart are still holding in the negative territory, suggesting the technical outlook remains bearish and the current uptick risks chances of fizzling out ahead because of the barriers ahead. The bearish bias is supported by the acceptance of the price below the 200 Exponential Moving Average (EMA) at the $7365.9 level.

That said, if dip-sellers and technical traders jump in and spark a bearish turnaround, the price will first find support at the key demand zone ranging from $7238.3 - $7266.9 levels. If sellers manage to breach this barricade, downside pressure could accelerate, paving the way for a drop toward retesting the key support level plotted by a downward-sloping trendline extending from the early February 2023 swing low. On further weakness, the focus shifts towards the $7200.0 psychological mark.