US markets continued to edge lower on Friday, the combination of US & China tensions and Intel falling 16% led the fall. Intel reported well, beating expectations by 11%, but news that their next chip is delayed by 12 months was enough to see a sell-off.
This week we expect the US government to announce another round of fiscal stimulus. This should be enough to balance out the uncertainty that is coming from the US and China escalations.
The reporting season in the US continues, at this stage, out of the 113 in the SP500 that have reported – 86 beat expectations and 27 missed.
The XJO is set to have a weak open, around the key level of 6000. This is following weak leads from the U.S session Friday and their futures this morning.
The 6000 level is one of the strongest points of our market, with it acting as key support and resistance many times in the past. This gives hope that despite the expected bearish move, we have a good chance to stem the bleeding. Of course, if U.S futures push hard into the red during our session today, it will become much harder for 6000 to hold. The uptrend line also comes in roughly at these levels which should also help buoy our market.
We have been following the U.S market quite closely over the past few months. The XJO and SP500 charts look very similar. We did not share in their rally as much recently, so perhaps we wont fall as hard either.
We are still trading in an ascending triangle with key resistance at 6175 and the uptrend line coming in at roughly 6000. It is likely we break one way or the other this week, but do not expect continued directional movement as its not something we have been seeing for past few months. At this stage, it is safer to expect continued bullish to sideward movement, despite what the news and fundamentals might say.
China and America relationships continue to weigh on markets, but the prospect of further stimulus from U.S congress will likely help keep markets positive. In addition, FOMC are meeting this week and will likely keep things dovish. Virus cases continue to grow locally, and have maybe slowed down in some parts of the U.S.
US stocks fell on Friday, but losses were smaller than the session before. The selling across the past few days is being widely attributed to an increase in tensions between China and the US (and indeed China and every other Western nation). Investors are hoping that US lawmakers will pass another round of stimulus which is likely to be passed in the coming days.
Q2 company earnings season is ongoing in the US, and reports were again largely positive on Friday; so far around 75 percent of companies have beat their earnings expectations. Telecoms were the only positive sector on Friday while healthcare and technology were the weakest performers.