The sentiment in markets is mixed, leaving markets whipping sideways. We saw all sectors in the red in the US overnight except industrials and materials. All in all not much has changed in the US, although we saw many stocks show reversal signals overnight which could be a sign that the next few sessions will be bullish.
Locally we saw a very strong move lower in FMG as did RIO and BHP. This came as many expected Iron Ore to fall back to around $100 which saw many rushes to sell and lock in some profit. Overall, nothing else fundamentally has changed. This will become a very good buying opportunity in the three miners once we find the bottom of the current move. Forward PE- FMG 7.78, BHP 14.17, RIO 11.23. The materials sector’s current PE is running around 19.59.
Our market is set to open at around 5910, putting us roughly 20 points higher. This is despite a decent fall in the SP500 last night. U.S futures are in the green this morning which is likely where we are finding our strength. Yesterday’s fall had us pre-empting last night’s fall in the U.S, and so it’s not surprising we are due for a flat day today, where we look to their futures once more for leads during our session.
Ultimately, we continue to track sideward at the bottom of our channel at key support. A break of this level is unlikely until we see the U.S break theirs. The initial sell off was caused by the U.S and the recovery will likely be led by them too.
Due to this close connection, our eyes should be focused on news around U.S stimulus trying to get through congress, especially as the Fed recently put the onus on the U.S government to provide further help to the economy. Hopefully we see this develop further in the coming days.
US shares fell overnight, but closed well above their lows and above their opening levels. It was the second day of selling in a row for the index, with technology shares once again the worst performers. With tech stocks baring the brunt of the selling, it may indicate that the selling is mostly related to profit taking and concerns around extremely high valuations, whereas if it was the stocks most affected by the COVID-19 pandemic being sold, it would be more likely tied to economic concerns.
Economic data was weaker than expected overnight, with building permits and housing starts lower than expected, while jobless claims data was mixed. Other than tech stocks, financials also had a rough night, while basic materials and oil & gas stocks were the strongest performers.