Our market has been shaken by the latest moves from Trump. Technically the XJO fell back towards potential support around 6,700. Today we should see the XJO break through this level and head back to the key supports around 6,630-6,650; if those go, the next target to the downside would be some support at 6,500. If 6,500 breaks, we should see the index start to downtrend – something we have not seen this year. If the XJO can break higher, there are resistance levels around 6,775 and 6,875 after that. We will again see a large fall on open, but look for Australian GDP (released at 11:30 AEDT) as potentially causing additional movement.
Virgin Money UK Plc (VUK)declined -5.1%, after Marshall Wace LLP increased its net short position in the Company by 28.33% to 11 million shares, or 0.77% of the Company’s stock as of Nov 28, 2019. Cooper Energy Ltd (COE) was up +0.9%, after the Company announced successful conclusion of the four well appraisal program at the Callawonga oil field in Cooper Basin by the PEL 92 Joint Venture, in which COE has a 25% stake.
US markets fell over fresh concerns about the tariffs of the Trump government. The Dow closed 280.23 points lower (-1.01%) and the S&P 500 was down 20.67 points (-0.66%). European and Asian markets were lower as well.
In addition to the levies on steel and aluminium from South America, Trump also threatened tariffs on France and stated that if no deal was reached with the Chinese by mid-December, the tariffs scheduled for the 15th of December would still go ahead. The S&P 500 broke below some potential support at 3,100 index points, but closed above the lows of the day. If the S&P 500 continues to fall, there are additional potential levels of support at 3,050, and 3,020. If those levels break, 3000 is the next key level, if that goes we could start to see the index downtrend. The recent highs around 3,150 may act as resistance if the index can rise from here.
XJO Implied Volatility was up 14.57% and closed at 13.434%. The US volatility was up 20.93% and closed at 15.96%.
US Crude was up overnight despite the trade turmoil, but it is nowhere near regaining the he losses from Friday.
Gold jumped overnight due to the fear in equity markets.
Iron ore was mixed overnight.
The Aussie dollar rose against the US again.
Today’s trading: In Australia, data on GDP is to be published. In the U.S., MBA mortgage applications data is anticipated. In China and Japan, we get PMI data and, in the U.K., Markit/CIPS PMI data is anticipated.
Another significantly lower open awaits the Australian market as trade turmoil is shaking investors confidence. It is hard to say where things will stall to the downside, but with Trump indicating that he is now happy to take the US-China trade war into 2020, we could see some more downwards movement. With prices essentially at record levels, yet global economic growth and corporate profit growth fairly anemic, the risk remains to the downside. Regardless, markets have shown incredible resilience in 2019 and that may continue to be the case. We have Australian GDP out today at 11:30 AM AEDT, economists are expecting a rate of growth around 1.7 percent, which whilst not great, would help us avoid a per-capita recession (population growth is sitting at 1.6%).