There is a hint of optimism in the air, with the year-on-year decline in housing prices slowing, to around -5% nationally, on the back of lower interest rates.
The ASX 200 hesitated in its downward slide but is still likely to test support at 6400. Breach would offer a target of 5400.
Iron ore continues to trade in a narrow range above short-term support at $90, suggesting continuation of the down-trend. Breach would offer a medium-term target of $80 per ton.
The ASX 300 Metals & Mining index is testing long-term support at 4100. Breach would complete a head and shoulders reversal, with a target of 3400.
The Financial sector hesitated slightly, after a sharp fall last week. The rebound was undermined by an ANZ profit downgrade:
ANZ today announced its second half 2019 Cash Profit will be impacted by a charge of $559m (after-tax) as a result of increased provisions for customer related remediation.
Major banks’ net interest margins are also under increasing pressure as the RBA lowers interest rates.
Expect ASX 200 Financials to test primary support at 6000. Breach would signal a primary decline, with a target of 5200.
REITs are surprisingly soft in a financial market desperate for yield. But there is wide disparity in the sector, with BWP for example surging, while office and industrial fund Dexus (DXS) is undergoing a sell-off.
We maintain exposure to Australian equities at 25% of portfolio value, with a focus on defensive and contra-cyclical stocks, because of our bearish long-term outlook.