The XJO yesterday flirted with the 6,750 level all day and managed to close slightly above, using it as a level of support. The next level the market needs to break is the 6,775 resistance, then it is clear skies to the all-time high level of 6,875. To the downside, there is support and the 100 and 50-day moving averages at 6,650-6,630, If the support at 6,630 breaks, the next target to the downside after that would be a more gradual, longer-term uptrend line around 6,550. Despite a series of all-time highs on US markets, our XJO has been holding back, largely due to a weakness in bank reporting.
Nine Entertainment Co Holdings Ltd (NEC)was down -5.7%, after the Company provided disappointing guidance, expecting low single digit growth in FY20 proforma group EBITDA (pre AASB16 impact) amid expected decline of mid-single digits in Metro FTA market. Whitehaven Coal Ltd (WHC) was down -5.0%, following the news that U.S. investment firm Farallon Capital has sold its 9.3% stake in WHC to investment bank UBS for $306m. Domain Holdings Australia Ltd (DHG) was up +3.7%, after Macquarie Bank upgraded the recommendation on the stock to Outperform from Neutral.
US markets were mixed again, with the DOW closing flat, whilst the S&P 500 notched higher. The Dow closed 0.07 points higher and the S&P 500 was up 4.83 points (0.16%). European and Asian markets were mostly higher.
US markets have run out of momentum for the moment as everyone awaits more substantial information on how trade negotiations are going. Trump continues his rhetoric that a phase one deal is close and that the US will only sign a deal that is good for the US. He also went on to say that he will increase tariffs significantly on Chinese goods if they don’t come to a deal. Technically, the S&P 500 has stalled at the current level for the past week or so. It is hard to say where resistance would be for the index, as the current levels are in all-time high territory, but at the moment it looks unable to push through 3,100. If the S&P 500 falls from here, there are potential levels of support at 3,050, followed by 3,020. If those levels break then, 3000 is the next key level, if that goes we could start to see the index downtrend.
XJO Implied Volatility was up 2.48% and closed at 10.948. The US volatility fell -5.47% and closed at 12.07%.
Crude fell a little overnight
Gold sold off heavily at one point, before a strong reversal.
Iron ore rebounded back above 80.00 overnight after vale signaled downgraded it’s guidance for Iron Ore sales.
The Aussie dollar edged lower.
Today’s trading. In Australia, data on Westpac consumer confidence to be published. In the U.S., data on MBA mortgage applications is anticipated.
It will be all eyes on the New Zealand central bank today at midday, they are expected to cut rates from 1% down to .75%. The last time the RBNZ cut rates, our market had a little bit of a move up so we could see a similar reaction today. If they surprise to cut a half percent we could see a much stronger reaction today. The markets seem to be very keen on further rate cuts and central bank stimulus, so this is the next real catalyst for us this week. Otherwise, with the lack of any update on the trade, we still need to remain cautious that something larger could happen as we get closer to the pre-Christmas tariff deadline in December.