Overnight in the US, we saw markets pull back a little which was no surprise considering the strong push higher over the past few weeks. Markets in the short term are looking technically overbought. Do not forget everyone was warning of a very volatile whippy market leading into the election, as still may be the case. A pullback here will set the markets up perfectly for a big push higher after the election.
We saw the US banks kick off the reporting season, JPMorgan Chase & Co, First Republic Bank, and Citigroup Inc all beat expectations on earnings. Generally, it was trading revenue that helped the banks out. But we saw broad selling after the report as many are still worried that next year things will still get worse with many more loans defaulting.
Fastenal Co, which is a supplier of fasteners to the construction industry also beat on earnings but only by 2%. It did however have a slower quarter than last with a fall of 9.52%.
Locally there is still a lot of confusion around coal exports to China, it seems that some importers have been instructed to stop importing coal to slow shipments. This is to allow the unofficial 300 million tonnes annual quota to be met by December 31 and not exceeded. At this stage, we have no official response as China continues to stay silent.
With negative leads from the U.S last night, our market is set to have a negative open. Their futures remain flat this morning, not providing any insight.
Yesterday our market got to post fall highs around 6200. This is a key level of our market and marks the top of the channel we have been trading in since June. The expected pullback on open will have us reflecting off 6200 and maintaining the channel pattern for now. The next key level for our market is once gain 6000, which is also where the 200,100, and 50 MAs have converged. It is starting to feel more apparent that for our market to push through 6200, the U.S may need to push through their all time highs.
US shares fell overnight, with analysts blaming the stalemate over the fourth round of US fiscal stimulus. The reality is that stimulus has been uncertain for a while and the falls were perhaps brought about by the market over extending last week and on Monday.
We also saw company earnings reporting from some of the large US banks, which caused selling in financials. Overnight US inflation numbers for September were released, showing slightly lower CPI than expected. Financials and Oil & Gas stocks were the weakest performers overnight, while technology stocks fell the least.