Lower Rates Give the ASX a Nice Tailwind

ASX in 2020
Two Big Factors to Impact the ASX in 2020: Big Miners and Big Banks

Last year, central banks around the globe were in cutting mode. Our reserve bank was no exception. Interest rates in Oz now sit at historic lows.

And some analysts say they’re set to go lower in 2020.

Cash has become less attractive to hold. And that’s likely to have ripple effects for our share market. And likely to see investors pile into the market and keep share trading on the boil.

Low rates also means that good, dependable, dividend paying stocks will start to look more attractive in 2020.

So, companies related to share trading services that pay a good dividend may be something to watch.

One company that has a 90% profit dividend payout policy and generates revenues from share trading services, is the ASX exchange itself, ASX Ltd [ASX:ASX].

And things look to be going OK with the ASX, if the reporting numbers be any guide. When the company last reported, underlying profits were up 7.7% and dividends up 5.7% on the prior year.

Let’s bring up the chart:

Port Phillip Publishing

Source: Optuma

[Click to open in a new window]

Stocks don’t go up in a straight line. At some point they must retrace and consolidate those prior gains. Which is exactly what the ASX has done. The share price has been holding a steady line on the chart for months.

What now for ASX?

The chart now gives you some reference points to work with. The stock is finding support around $78 and resistance around $84.

So rather than read all the analysis, follow the weight of money. Let the market be your guide.

The company reports in February and that’s something to keep in mind. Look now for a break above or below those key levels into the February reporting date. That will generally tell you which way revenues are heading.

Should it break those key levels, then you might want to do some further study on the stock. It’s perhaps one for the watchlist.

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