On Thursday, the S&P/ASX 200 Index (ASX: XJO) had one of its best days in years. The benchmark index surged an incredible 4.5% to 7,709.6 points.
Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:
The Australian share market looks set to give back some of yesterday's monster gains on Friday following a selloff in the United States. According to the latest SPI futures, the ASX 200 is expected to open 131 points or 1.7% lower this morning. On Wall Street, the Dow Jones was down 2.5%, the S&P 500 fell 3.5%, and the Nasdaq dropped 4.3%.
ASX 200 energy shares including Santos Ltd (ASX: STO) and Karoon Energy Ltd (ASX: KAR) could have a tough session after oil prices fell overnight. According to Bloomberg, the WTI crude oil price is down 3.5% to US$60.19 a barrel and the Brent crude oil price is down 3.1% to US$63.47 a barrel. This was driven by concerns over an escalating trade war between the US and China.
The Lynas Rare Earths Ltd (ASX: LYC) share price could be overvalued according to analysts at Bell Potter. This morning, the broker has downgraded the rare earths producer's shares to a sell rating with a reduced price target of $6.50. It said: "Whilst we like the business, asset, and team, we believe there is significant optimism priced into the stock. Historically, LYC has responded to earnings revisions, however the market has looked through that for the past 12 months. We do not see risks to the balance sheet under our price deck, however a lower-for-longer NdPr price could draw attention."
ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a good finish to the week after the gold price climbed to a new record high overnight. According to CNBC, the gold futures price is up 3.6% to US$3,191.3 an ounce. Trade war concerns and lower than expected US inflation boosted the precious metal.
Analysts at Goldman Sachs have reaffirmed their buy rating on Nextdc Ltd (ASX: NXT) shares following a review of the data centre market. The broker has put a buy rating and $14.70 price target on its shares. It said: "We believe the company has a compelling growth profile and a proven and profitable business model, noting it trades on a growth-adjusted discount vs. peers, which we view as unjustified."
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