IG’s Kyle Rodda picks 3 large cap stocks to watch in the week ahead
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The ASX 200 has recently been weighed down by the heavy hitting mining and financial sectors.
The miners have come under sustained pressure over the last couple of months, following the ongoing debt crisis surrounding Chinese property giant Evergrande Group.
Steel demand in China is heavily influenced by its massive property sector, but Evergrande’s ability to dodge a default last week has lifted sentiment.
Since Monday, the iron ore price has rebounded and is now closing in on the US$100/tonne level, after surging almost 15% in the last three days.
Meanwhile, financial stocks have been weighed down by CBA shares, which plummeted last week after the company delivered to the market an underwhelming trading update.
But banks will shape to benefit from a rise in interest rates, a scenario that has become more likely with each CPI print.
Reopening-themed stocks like travel and entertainment are also expected to bolt higher as we emerge completely out of lockdowns.
On Wednesday, low cost carrier Webjet (ASX:WEB) already flagged a ‘turnaround’, predicting that booking volumes could reach pre-Covid levels by October next year.
Against this backdrop, Kyle Rodda, a technical analyst at broker IG, has given us three ASX stocks that have caught his eye, and may be worth watching in the week ahead.
Rodda reckons FMG shares are showing signs of having bottomed, after plunging from record highs as global iron ore prices tumbled.
“The weekly RSI has climbed out of overbought territory, with momentum now skewed to the upside, though the overall trend for the stock remains downward.”
“With iron ore prices recovering lately, FMG shares have broken through resistance at $15.50 per share, and retested the 100-week moving average, with a break through that level opening a reversions to the 20-day moving average around $18.30.”
FMG shares jumped 10% on Tuesday as ASX investors bought iron ore miners on the prospect of stimulus for a slowing Chinese economy.
China’s central bank has just announced a possible easing of measures, telling its banks to issue more loans for property projects with the aim of easing liquidity strains.
“The slow unwind of travel restrictions across Australia and recent resurgence of COVID-19 lockdowns across Europe has seen travel stocks on the ASX struggle in recent weeks.”
“Flight Centre shares have been one to push lower, as its price continues to oscillate within a trend channel, having seen a false break-out off the back of easing social distancing measures in New South Wales and Victoria.”
“FLT shares have faded towards the 20, 50 and 100 week moving averages now, with the upper bound of its trend channel around $22.80 and the lower bound around $15.20.”
The FLT stock price tumbled to a two-month low on Monday following news of the latest lockdown in Austria.
In its AGM held in October, FLT said it’s burning cash at the rate of $40m a month, but the company is optimistic of a rebound in international travel as borders open up.
“Crown Resort shares surged last week, after blue-chip investment manager Blackstone increased its offer for the company to $12.50, from a previously rejected $12.35 per share.”
“The prospect of higher offer price, along with the potential for a new and more polished management team, saw CWN shares break through resistance at $10.20, to meet resistance at around $11.50.”
“If that level breaks, with momentum turning to the upside right now, then it might open up a rally towards the Blackstone offer price.”
The casino has been allowed to keep its casino licence in Melbourne, despite a royal commission finding the company had engaged in “illegal, dishonest, unethical and exploitative” conduct.
Earlier this year, the NSW gaming regulator ruled that Crown was no longer suitable to hold the licence for its new Sydney casino.