A large amount of business in Victoria will be affected over the next 6 weeks by the stricter lockdowns. One way or another, things will change as many businesses that are allowed to stay open have some form of restrictions. Whether they must work from home or reduce the number of workers it will have a large effect on the local economy. In saying this, many are expecting to be able to apply for Keepers allowance if they have not already. Also, a business will be able to apply for a 5K grant and the PM approved a $1500 pandemic payment.
Retail like Bunnings, Kmart, and Officeworks will need to switch to online-only, whilst essentials like food and pharmacies remain open.
The Tech rally is back on in the US as the Nasdaq leads the markets higher. Also, reporting continues to beat expectations out of the 318 in the SP500 that have reported 253 (79%) beat expectations and 65 (21%) missed.
Further fiscal stimulus from the US is still stuck in Congress and negotiations continue. This needs to be finalised this week or many people that have been affected by lockdowns will not get payments desperately needed.
With positive leads from the U.S our market is set to open near the 6000 key level once again. Despite U.S futures being flat this morning, our market has a bit of catching up to do as we disconnected from them the past few days, likely on the back of stage four lock down in VIC and a potential second wave in NSW.
The move back to 6000 still has us lower comparatively to the U.S, but we will likely stall here as it is one of the strongest levels for our market, having been resistance and support many times in the past. A push through of this level in the coming days (provided the U.S remains strong) will hopefully see us back to our post fall highs of roughly 6175.
The uptrend line has broken, but that doesn’t mean we should expect continued bearish movement. The opposite is true where we continue to assume bullish to sideward movement until we see signs of a change in trend. With the uptrend line no longer in play, the most relevant pattern for the XJO is now a sideward channel between roughly 5875 and 6175, though it is not so clearly defined. It is more simply representative that our market is not willing to create new highs, but equally reluctant to have sustained falls.
Fundamentally, we need to keep one eye on the U.S, and the other on local happenings. Regarding the U.S, their economic aid to fight the virus is set to end Friday. Democrats and Republicans are at in impasse on extending the aid, with conflicts on how much stimulus is needed and what to spend it on. In addition, their relationship with China continues to sour. Locally, Victoria prepares for lockdown with many businesses forced to close their doors to the public, and therefore perhaps permanently. NSW may yet still have their second wave.
US stocks pushed higher overnight, with positive economic data and earnings reports from tech stocks. The tech heavy NASDAQ index reached another all-time high overnight and the flagship S&P 500 index traded at its highest level since the virus selling began. Reports that Microsoft was in talks to buy the Chinese app TikTok also boosted Microsoft and perhaps some other tech stocks. Data showed that US manufacturing was expanding at its fastest rate since March 2019. Talk of another round of US fiscal stimulus also boosted markets. Tech, Healthcare, and Oil & Gas were the strongest performers overnight, while utilities stocks were by far the weakest.