Our XJO fell again yesterday, coming back towards the medium term uptrend line. With today’s expected higher open, the XJO looks set to trade back inside the range of the past few months. To the upside, there are resistance levels around 6,775 and 6,875 after that. To the downside, if the medium term uptrend breaks 6,500 would be the target, If 6,500 breaks, we should see the index start to downtrend – something we are yet to see this year.
OOH! Media Ltd (OML) surged +23.9%, after the Company raised its FY19 underlying Ebitda forecast to A$138-143m from A$125-135m amid improved bookings for September and the 4Q. Metcash Ltd (MTS) was down -4.8%, after the Company recognized a non-cash impairment to goodwill and other assets in its food and grocery business by $237.4m following the loss of a contract to supply convenience store chain 7-Eleven. Xero Ltd (XRO) was up +1.5%, after Morgan Stanley raised price target on the stock to A$90 from A$65 with a rating of Overweight.
US markets bounced back overnight after trade pessimism turned into trade optimism. The Dow closed 146.97 points higher (0.53%) and the S&P 500 was up 19.56 points (0.63%). Asian markets were lower, but European markets closed significantly higher.
People involved in the trade negotiations, who asked not to be identified, were quoted in Bloomberg this morning stating that they still expected a ‘phase one’ trade deal to be completed within the next two weeks. It is surprising that markets still trade so heavily on the statements of associated officials, when there is so much contradiction and so little substance. The S&P 500 bounced back overnight and really isn’t too far off its recent all-time high resistance level around 3,150. If the S&P 500 resumes falling, 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.
XJO Implied Volatility was up 5.63% and closed at 14.235%. The US volatility fell 0.74% and closed at 14.8%.
US Crude continued its rally, rising strongly on its third day of gains.
Gold fell slightly overnight.
Iron ore jumped overnight.
The Aussie dollar rose slightly against the US again.
Today’s trading: In Australia, data on trade balance to be published.
Our market looks set to bounce back today after two days of significant falls. Our falls seriously outpaced those overseas, and this would no doubt be of concern to Australian investors who are essentially buying Australian shares at their most expensive prices ever. Australian GDP out yesterday was also underwhelming, with Australia’s economic growth roughly matching our population growth rate. Today we will see Australian trade balance and retail sales, with investors hoping that retail sales will start to see some Christmas cheer after months of poor reads.