5 things to watch on the ASX 200 on Wednesday

BHP Group Ltd (ASX:BHP) and Santos Ltd (ASX:STO) shares will be on watch on the ASX 200 on Wednesday…

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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought back from a morning decline to continue its positive run. The benchmark index rose 0.35% to 5,962.1 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to drop lower.

The ASX 200 looks set to end its winning streak on Wednesday. According to the latest SPI futures, the benchmark index is poised to open the day 8 points or 0.1% lower. This follows a poor night of trade on Wall Street. Late in the session the Dow Jones is down 1.1%, the S&P 500 is 1.1% lower, and the Nasdaq is tumbling 1.2% lower. News that President Trump is calling off COVID-19 stimulus talks until after the election led to the selloff.

Federal Budget reaction.

A number of ASX 200 shares will be on watch today after the release of the Federal Budget last night. Retail shares may be among the biggest winners after the government cut personal tax rates to put more funds in consumers’ pockets. Elsewhere, R&D tax incentives have been left untouched, manufacturers have been allocated $1.5 billion in grants, and states have been given $10 billion to boost infrastructure projects. All in all, Australia’s debt is expected to reach almost $1 trillion in the coming years.

Oil prices storm higher.

Energy shares including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could push higher again on Wednesday after oil prices continued their recovery. According to Bloomberg, the WTI crude oil price is up 2% to US$40.01 a barrel and the Brent crude oil price is up 2% to US$42.10 a barrel. Traders were buying oil amid supply disruptions due to an approaching hurricane on the Gulf Coast.

Gold price sinks lower.

Gold miners Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) could have a tough day ahead after the gold price sank lower. According to CNBC, the spot gold price has fallen 1.15% to US$1,898.10 an ounce. The price of the precious metal came under pressure after U.S. Treasury yields climbed.

BHP rated as a buy.

The BHP Group Ltd (ASX: BHP) share price will be on watch after analysts at Goldman Sachs reiterated their buy rating and $40.10 price target on the mining giant’s shares. The broker notes that BHP has acquired a greater share of the Shenzi asset in the Gulf of Mexico. Based on Goldman Sachs’ long run oil prices of US$60 a barrel, it expects the acquisition to be highly accretive to earnings.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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