5 things to watch on the ASX 200 on Thursday

Oil Search Ltd (ASX:OSH) and Saracen Mineral Holdings Limited (ASX:SAR) shares will be on watch on the ASX 200 on Thursday…

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped notably lower. The benchmark index fell 1.1% to 6,607.1 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected rebound.

It looks set to be a much better day for the Australian share market on Thursday. According to the latest SPI futures, the ASX 200 is poised to open 129 points or 2% higher. This follows a strong night of trade on Wall Street after the Democrats came close to taking control of the Senate. In late trade the Dow Jones is up 1.7%, the S&P 500 is up 1.1%, and the Nasdaq has risen 0.3%.

Democrats on verge of Senate victories.

US stocks rose strongly overnight after vote counting in Georgia appeared to point to the Democrats winning both Senate races. This will open a path to a progressive policy switch in Washington. This is because if both Democrats win, it would mean a 50-50 tie in the upper chamber. However, with Vice President-elect Kamala Harris as the tiebreaker vote, the Democrats will effectively have control of the Senate. This outcome could allow the passing of new coronavirus relief, raising hope for the country’s economic recovery.

Bank shares given conviction buy ratings.

According to the AFR, Citi’s US bank analysts believe Australia and New Zealand Banking GrpLtd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) shares are in the buy zone even after their strong final quarter gains. The broker has ANZ and Westpac on its conviction buy list but has downgraded National Australia Bank Ltd (ASX: NAB) to neutral after a particularly strong run. It expects the big four banks to resume paying out up to three-quarters of their profits as dividends.

Oil prices continue to rise.

It looks set to be another positive day for energy producers such as Oil Search Ltd (ASX: OSH) and Santos Ltd (ASX: STO) after oil prices continued to rise. According to Bloomberg, the WTI crude oil price is up 1.8% to US$50.83 a barrel and the Brent crude oil price is up 1.7% to US$54.50 a barrel. This follows a surprise production cut by Saudi Arabia.

Gold price sinks lower.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could spend the day in the red after the gold price sank lower. According to CNBC, the spot gold price has fallen 2.2% to US$1,911.80 an ounce. This was driven by a rebound in the US Dollar and the widening of treasury yields.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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