CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

ASX200 rises 26.3 points as gold stocks post impressive gains

Gold stocks saw strong gains as comments from Federal Reserve Chairman, Jerome Powell, sparked concerns over the global growth outlook.

Gold stocks Evolution Mining, Saracen Minerals and Resolute Mining all rose strongly during the day as Australian investors digested comments from the US’s Federal Reserve Chairman, Jerome Powell.

Prepared remarks from Chairman Powell, which hinted at a rate cut, deepened concerns over the outlook of the US and global economy.

Off the back of this, Spot Gold climbed as high as $1,424 overnight, as investors and speculators pushed the price of the yellow metal higher.

The price of oil was also up, moving past $60 per barrel as US stockpiles fell and concerns over production disruptions in the Gulf of Mexico mounted.

Powell’s dovish remarks push equities higher

The theme of uncertainty dominated Powell’s prepared testimony overnight.

Specifically, Chairman Powell pointed out that ‘uncertainties about the outlook have increased in recent months. In particular, economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy’.

Nevertheless, Chairman Powell also pointed out that the Federal Reserve was ready to act appropriately to sustain the US growth outlook if necessary.

US investors took the implication of a further rate cut positively, with the S&P500 rising 0.45% and the NASDAQ up 0.75% overnight, respectively.

Australian equities played follow the leader during today’s trade, with the ASX200 rising 26.3 points by the close.

Gold stocks lead the ASX

The ASX200 reached 6716 points by the end of the day, with Australian gold stocks seeing particularly strong gains off the back of gold’s ascent above the $1,400 mark.

Resolute Mining Ltd, the A$1.10 billion gold miner proved to be the best performing ASX200 stock in morning trade – rising as much as 7.58%. Evolution Mining Ltd, another prominent gold mining and exploration company, also moved 3.49% higher.

ASX oil stocks also performed well off-the-back of oil moving past $60 per barrel. Santos was up as much as 1.61% and Beach Energy Ltd rose as much as 3.30%.

Financials mixed

While gold and oil stocks both moved higher, financials did not fare as well. Shares in ANZ and Commonwealth Bank were both down as much as 0.96% and 0.28%, respectively.

Interestingly, even though news recently emerged concerning a potential A$100 million class action lawsuit against National Australia Bank Ltd – the stock was up 1.28% at the time of writing.

Ultimately, given that US-China trade tensions remain ongoing and as Chairman Powell aptly noted, the global outlook also remains uncertain, we could potentially see further gains from defensive stocks in the months ahead as investors grow warier.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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