The S&P/ASX 200 Index (ASX: XJO) began the week on a subdued note, slipping slightly to 8,981.4 points on Monday. Investors are now keenly watching to see if the market can rebound on Tuesday, buoyed by positive signals from Wall Street.
According to the latest SPI futures, the ASX 200 is expected to open 16 points, or 0.2%, higher. This optimism comes despite mixed results in the United States, where the Dow Jones dipped by 0.1% while the S&P 500 and Nasdaq rose by 0.4% and 0.7%, respectively. Here are five key factors that could influence the ASX 200’s performance on Tuesday:
ASX 200 Expected to Rise
Market analysts are predicting a positive start for the Australian share market, driven by gains in U.S. equities. The S&P 500 and Nasdaq’s upward movement suggests a favorable environment for global markets, potentially lifting the ASX 200 as well. This anticipated rise follows a period of cautious trading, reflecting broader economic uncertainties.
Northern Star Resources: A Promising Buy
Investment firm Bell Potter has highlighted Northern Star Resources Ltd (ASX: NST) as a stock to watch. The broker has maintained its buy rating on the gold miner, increasing its price target from $20.85 to $30.00. Bell Potter stated,
“We believe NST will enter a cashflow inflection period over the coming ~2 years, underpinned by strong Australian dollar gold prices, which will drive shareholder returns higher.”
This optimism is fueled by robust gold prices, which are expected to bolster the company’s performance.
Oil Prices Rebound
ASX 200 energy stocks, including Karoon Energy Ltd (ASX: KAR) and Santos Ltd (ASX: STO), may benefit from a rebound in oil prices. Overnight, WTI crude oil rose by 1.5% to US$61.79 per barrel, while Brent crude increased by 1.6% to US$65.57 per barrel. This surge was prompted by OPEC’s decision to increase output by less than anticipated, providing a potential boost to energy shares.
Electro Optic Systems: Positioned for Growth
Electro Optic Systems Holdings Ltd (ASX: EOS) is another company attracting attention. Bell Potter has reaffirmed its buy rating on the defence and space company, raising its price target to $11.20. The broker noted,
“EOS is positioned as a market leader in counter-UAS solutions, in particular directed energy, and is fully leveraged to increases in defence budgets globally magnified by higher spending allocations to counter-drone technology.”
This strategic positioning could lead to significant growth as global defence spending rises.
Gold Prices Hit Record Highs
The gold market is experiencing a remarkable surge, with prices reaching unprecedented levels. This rally is driven by a combination of geopolitical tensions and inflationary pressures, which have heightened demand for safe-haven assets. As investors seek stability, gold’s appeal continues to grow, providing a favorable backdrop for companies like Northern Star Resources.
Implications and Market Outlook
The anticipated rise of the ASX 200 on Tuesday reflects broader global market trends, with positive developments in the U.S. providing a supportive environment. However, investors remain cautious, mindful of ongoing economic challenges and geopolitical uncertainties. The performance of key sectors such as energy and resources will be crucial in determining the market’s trajectory.
Looking ahead, the focus will be on how these factors evolve and their impact on the ASX 200. As markets navigate a complex landscape, strategic investments in sectors like gold and defence could offer promising opportunities for growth.
