After seven straight days of plummeting prices – plus a new 52-week low – Australian shares finally rebounded yesterday, with the ASX 200 ending the session up 1.41%, at 6523.8 points.

The smaller end of the market followed suit, with the emerging companies index (ASX: XEC) up 1.2% for the day and the Small Ordinaries (ASX: XSO) finishing 1% higher.

It was also a positive day for eight of the 11 sectors tracked by the ASX, including the energy, financial, consumer staples, materials and consumer discretionary sectors.

With high inflation and recession fears still a concern, RBA governor Philip Lowe yesterday gave a speech to the American Chamber of Commerce in Australia in which he tipped a decline in inflation “by early next year”, with an expected peak around 7% in the December quarter.

Regardless of whether a recession actually eventuates, some industries are known for their ability to pick up the pieces from a market drop and build themselves up to a relatively stronger position – think healthcare, biotech, consumer staples and basic transportation.

Wall Street opened relatively flat overnight, having reopened after the US’s Juneteenth public holiday, while European markets recovered some of their losses from the recent sell-off.

Closer to home, the market is grappling with continued supply chain issues, inflation fears, cash rate rises and geopolitical tensions. Even after a significant sell-off there is still potential for a bit more selling over the coming days and weeks, however there are several strong supports to battle through before the market reaches 6000.

Based on the ‘head and shoulders’ formation on the daily chart, we expect a strong support level around the 6340 to 6380 level, then again at 6200, then 6000. On the upside, we expect to see resistance around the 6590, 6750, and 6965 levels. With implied volatility around 23% today, the XJO could continue to experience a wide trading range.

Superannuation balances are expected to retreat further into the red on account of rising interest rates and the global stock market downturn, with even the most conservative super options yielding a significant decline for retirement savings.

Some say the extreme market volatility that hit funds in April is to blame, citing an average drop of 4-5% in super funds, the “biggest fall since the GFC in 2009”. 

Meanwhile, the spot prices of oil and gold crept upward by 1% and 0.05% respectively yesterday – potentially favouring energy businesses operating in the former.

The market is putting investors through trying times. But to paraphrase a fund manager who presented with us recently, it’s important to keep your emotions in check and have a keen eye out for sensible investments – because they’re out there, if you know where to look.

We have an upcoming webinar with a company positioned to play the role of ‘enabler’ in the cancer care industry as it moves from ‘treatment’ to ‘personalised cure’. Prescient Therapeutics (ASX: PTX) is a biotech company with exclusive technology that has the potential to revolutionise cancer treatment in the US$280 billion oncology industry, healthcare’s largest sector.

Tomorrow at 1pm (AEST), we will be joined by Prescient CEO and managing director Steven Yatomi-Clarke for what we think will be a fascinating conversation for potential investors. Click here to attend.

Reach Markets have been engaged by PTX to assist with their investor communications.

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