US markets remain resilient against US and China tensions and Virus numbers increasing, as they continue to edge higher. Reporting season kicking off next week will be at the forefront of investors minds.
Locally the mood is a little mixed as investors digest Melbourne closing for another 6 weeks. The good news is that the government has signalled an extension to Keepers and Seekers, and is also looking to move forward planned tax cuts. We have been talking about this for some time, bad news becomes good news because we get more stimulus.
In addition to this, we have seen the big four come out and announce an extension to the loan holidays. These should stop the worst of what many people are expecting to come from residential real estate. As long they do not unwind these measures too quickly once this is all over.
Keep an eye on Iron Ore miners today as the Dalian futures continued higher overnight and is now sitting just below 800 Yuan. Port prices are now sitting at $106.50 US. Iron Ore is completely out performing most other commodities through the pandemic. We expect the miners to continue an overall uptrend, and perhaps out preform coming into the August reporting.
With positive leads from both the U.S session last night and their futures this morning, our market is set to open back towards the 6000 level which is now once more a resistance level. The falls yesterday were clearly exacerbated and a large portion of it should be reversed in our session today provided U.S futures remain strong. If we do see a strong positive session today it will indicate that we have bounced off the uptrend line which we managed to hold yesterday.
The last week or so of trading has created a higher peak and if we bounce a higher a trough may be coming. This gives confidence of a continued uptrend. Aside from this, the market continues to track sideward overall with a lot of price action hanging around the 5950- 6000 levels.
Victoria has gone back into lockdown which has immediate negative effects for the state’s economy. It also has stronger future ramifications as business will have less confidence to reemploy, restock, and invest the next time the lockdowns are pulled back.
There is no doubt that the virus cases and subsequent negative economic data continues to weigh on the market, yet we remain in an uptrend, and markets have not fallen aggressively due to stimulus. From here the market will likely look to company guidance both in the U.S in the coming weeks, and ours locally in August.
US shares pushed higher overnight, with US tech stocks leading the charge. Stocks in virus-affected sectors like travel, tourism, and some retail, are still performing fairly poorly as investors remain cautious as the market heads into an important reporting season, which kicks off in earnest next week. US infections continue to be high, with their numbers now topping 3 million infected, a quarter of the global total. Other than the strong Tech stocks, Financials, Utilities, and Telecoms also rose, while Basic Materials and Oil & Gas stocks fell.