ASX200 outlook: top 3 stocks to watch this week
We analyse some of the most important things traders and investors should watch out for in the week ahead.
ASX200 dips on China growth and financial stability risks
It was another volatile week for the Australia 200, with the index falling 0.8% for the week. The local market found itself caught-up in the volatility that swept through global markets to begin the week, sparked by fears around the potential collapse of Chinese property developer Evergrande Property Services Group Limited and its possible knock-on effects to Chinese financial stability and economic growth. The mining sector proved the biggest drag on the ASX200 index, with iron ore prices coming under selling pressure on risks to global growth.
Top 3 ASX stocks to watch
Here are 3 stocks that have caught our eye and may be worth watching in the week ahead.
• Northern Star Resources Ltd (NST)
• Whitehaven Coal Ltd (WHC)
• Zip Company Limited (Z1P)
Northern Star Resources
Despite general concerns about global growth and, at least at the outset of the week, a subsequent drop in global bond yields, gold prices fell throughout the trading week. The drop in the value of the yellow metal weighed on Aussie gold miners, even if the impacts were slightly ameliorated by an Australian Dollar weakened by risk-off sentiment. Northern Star Resources’ share price fell to two-year lows as investors reduced exposure to gold-mining stocks, to close below what was price support at roughly $8.80 per share. The technicals look quite poor for the stock now, with the trend and price momentum skewed to the downside. The next major level of long-term price support looks to currently sit at around $7.65 per share.
Whitehaven Coal (WHC)
Whitehaven Coal shares surged last week, as global coal prices jumped to a record high as energy demands spikes on what is an unfolding and worsening energy shortage globally. Whitehaven shares look to be forming a primary uptrend now, with the weekly RSI showing a stock that is technically overbought, but that that is not signalling yet a meaningful slowdown in momentum. WHC shares probably remain highly tied to the budding energy crisis now and any further upside in coal prices, and in the short-term, risk-reward appears skewed to the downside given the stock’s overbought technicals. A re-test of previous price resistance now support at around $2.50 may indicate whether the stock’s longer term uptrend remains in play.
Z!P Company Limited (Z1P)
Z!P Company shares were amongst the outperformers on the ASX200 last week, as the company announced expansion plans, that included an acquisition of an Indian payments company. Following a soft 6-months after the buy-now-pay-later market frenzy at the beginning of the year, Z!P shares have been trending lower, as the mania that enveloped the sector fades. From a technical standpoint, Z!P’s price action looks bearish in the long run. A descending triangle has formed in the price, implying a looming break to the downside for the stock, with price support at around $4.90 the next key level to watch.
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