ASX 200 Consolidates Ahead of Next Move

• ASX 200 continues to look for momentum. 

• Central banks around the world are rattling the markets. 

• Commodities remain in focus. 

During the Wednesday session, the ASX 200 initially tried to rally but gave back some of its earlier gains into the afternoon. All things being equal, this is a market that has been going sideways for a couple of weeks, as it is looking for some type of directional cue. Ultimately, the ASX 200 is still being influenced by major indices around the world. And all of the major indexes are range bound awaiting their next clear directional break.  

Central Banks 

Central banks will continue to be a major influence, as although several of the major central banks around the world have cut interest rates as of late, the reality is that some of these central banks have cut by 50 basis points, which some people are starting to look at through the eyes of potential panic. Historically speaking, any time the U.S. Federal Reserve has cut by 50 basis points over the last 30 years or so, it was ahead of something rather weak, such as the Global Financial Crisis. Look to Australia, and you have a market that could be vulnerable due to the fact that it is a smaller market, and it is over-represented by  commodities markets. 

Commonwealth Bank of Australia (CBA) 

The Commonwealth Bank of Australia was a winner during the trading session on Wednesday, as CBA gained 49c. It’s worth noting that technical traders will be paying close attention to the fact that price continues to respect the 50 Day EMA and has been walking along a trend line. Volumes have been a little lacking of late, so that is something that technical traders will also pay close attention to. CBA’s subsidy CommSec has seen a 37% increase in new accounts year-over-year, reaching 3 million customers, adding to the bank’s potential profitability. 

RIO Tinto Ltd (RIO) 

RIO Tinto dropped 2.27% during the trading session on Wednesday, as we continue to see commodity markets undulate. Some of the harder assets such as gold and silver fell during the trading session on Wednesday, which created a knock on effect for RIO. Despite the losses on Wednesday, RIO has gained 10.48% over the last month, correcting losses from earlier in the year to be positive 5.38% over the rolling12 month period. 

Xero Ltd (XRO) 

Xero Limited gained 1.54% for the session on Wednesday, as the information technology giant continues to rise. Over the last month, XRO has gained 3.45%, but more impressively, over the course of the last 12 months, XRO has gained a massive 25.29%. All things being equal, it is one of the better performers on the Australian exchange, and it’s probably worth noting that Australia has seen information technology exploding with gains, and it’s also just as important to notice that Xero is currently respecting the 50 Day EMA. Volume is somewhat light, but it has been very steady over the last couple of months. 

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