5 things to watch on the ASX 200 on Wednesday

Santos Ltd (ASX:STO) and Treasury Wine Estates Ltd (ASX:TWE) 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) was a very poor performer and sank lower. The benchmark index fell 1.05% to 7,097 points.

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

ASX 200 expected to fall

It looks set to be another difficult day of trade for the Australian share market on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open the day 39 points or 0.55% lower this morning. This follows a poor night of trade on Wall Street which saw the Dow Jones fall 1.35%, the S&P 500 fall 0.9% and the Nasdaq drop 0.1%. The latter was down as much as 3.5% at one stage before rebounding.

Federal Budget

The Federal Government has just unveiled its “recovery budget” which includes billions of dollars of new funding. Among the biggest winners from the budget will be the aged care sector, which gets a $17.7 billion funding boost, and low to middle income earners. The latter will see up to 10 million Australians receive another tax offset of up to $1,080 in their refunds. This could be a boost to consumer spending.

Oil prices rise

It could be a good day for energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) on Wednesday after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.8% to US$65.43 a barrel and the Brent crude oil price has climbed 0.5% to US$68.68 a barrel. Oil prices rose amid fears of fuel shortages in the United States.

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) will be on watch after the gold price edged higher overnight. According to CNBC, the spot gold price is up slightly to US$1,838.30 an ounce. Increased demand for safe haven assets was partially offset by rising bond yields.  

Treasury Wine rated as neutral

The Treasury Wine Estates Ltd (ASX: TWE) share price could be fully valued according to analysts at Goldman Sachs. According to a note, ahead of the wine company’s investor day event, the broker has retained its neutral rating and $9.30 price target. It notes that Nielsen data in the US continues to be supportive from a market share perspective. However, the market is now cycling the pandemic driven consumption levels and is subsequently experiencing double digit sales declines in retail.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. 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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