No surprise to see big tech pullback last night after such a massive rally the night before. Sentiment is still strong despite Covid-19 not slowing down. Donald Trump made comments last night that things will likely get worse before they get better. Earlier in the year, a comment like that would have sent markets 5% lower. This just shows how resilient markets are now.
It is still very early in the reporting season, so if companies continue to report better than expected then markets will likely hang onto the gains and continue up the staircase. At this stage, out of the 42 in the SP500 that have reported – 32 beat expectations and 10 missed.
Yesterday we saw a further 374 new cases in Victoria, which is high but not jumping high enough to put stage 4 lockdown on the table. As of Wednesday night, wearing masks will become mandatory when leaving the house.
Keepers and Seeker’s allowance have been confirmed to continue out to March next year. There will be a new eligibility test for JobKeeper 2.0 to weed out those businesses that have recovered over the past six months. The payments will reduce in September and then again in January next year.
XJO is set to have a weak open, following weak moves in both the U.S session last night and their futures this morning.
The strong run we had yesterday, thanks to both the government and RBA’s announcement of further stimulus, put us at key resistance around 6175. It’s not surprising our market is set to hold it this morning, and with weak leads from overseas it would be surprising if we broke through today.
On the other hand, the U.S did break their key level (our equivalent of 6175) but the move was not convincing.
The XJO held trend yesterday, so we still must assume bullish to sideward movement until we see otherwise.
The AUD/USD which broke strongly higher yesterday will likely put pressure on the miners today, and other companies that have a lot of operations overseas.
US stocks pushed higher again overnight, with the major S&P 500 index breaking resistance the night before. However, the index did pull well back from its highs, which is likely going to weigh on Asian-Pacific markets today. US stocks have been boosted by what has been a mostly positive earnings season so far, with more than 70 percent of S&P500 companies exceeding their earnings expectations. There was also talk of further stimulus checks for low income Americans and schools, although likely with a far narrower scope than the initial CARES act, which saw $1,200 payments to most US adults. Tech and Healthcare stocks puled back overnight, after rising the night before. Oil & Gas, Financials and Materials stocks were the strongest performers overnight.