ASX 200 Index: Bears taking on a key support level as energy sector slides
|- ASX 200 Index is held up at a 5310 level as a prior support and resistance zone.
- Oil and energy sector is weighing while Virgin goes into administration.
The benchmark S&P/ASX200 (^AXJO) is soft in Tuesday's trade on the news that Virgin Australia (VAH.AX) volunteered for administration while the price of black gold's May contract falls into record negative territory, ending -$37.63 – below zero.
For the first time in history, oil fell into negative territory, weighing on risk sentiment on Wall Street as investors get set for a series of corporate earnings that will factor in the COVID-19 lockdown figures. This led the US benchmarks to fall with the Dow Jones Industrial Average down 592 points, or 2.4%, to close around 23,650 while the S&P 500 index fell 1.8% to 2,823. The Nasdaq Composite Index finished the day lower by around 1% at 8,561.
ASX 200 Index energy and airliners down
The ASX200 finished Monday 2.45 per cent lower and is shedding more on Tuesday. Virgin Australia announced it was entering voluntary administration this morning failing to secure a rescue package from the Australian government. The air carrier, however, had already been struggling with a long-term A$5bn (£2.55bn; $3.17bn) debt prior to the air travel ban. Shares had been suspended in the firm for the past fortnight as it struggled to find a survival plan. The airline is now seeking new buyers and investors.
Virgin Australia chief executive Paul Scurrah was explaining: "Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis."
"Australia needs a second airline and we are determined to keep flying."
Meanwhile, Virgin Atlantic is also in seek of a bailout from the UK government. Sir Richard Branson - whose Virgin group is a part-owner of Virgin Australia - has offered a Caribbean island as collateral.
Elsewhere, the energy and oil stocks are down with Beach Energy losing -0.75% at the time of writing, Oil Search Limited - 1.13% Whitehaven Coal Limited -2.51% at the time of writing.
ASX 200 Index capped by 38.2% Fibo
The ASX 200 is losing its grip of the 38.2% Fibonacci level (5470). 5645 comes as the next resistance structure through it. To the downside, 5310 is a prior support and resistance zone that is holding up the downside correction. On a follow-through, bulls will look for the 5090s support structure to hold.
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