The ASX200 closed +1.27% higher yesterday, led by gains in Insurance (+2.19%) and Consumer Staples (+2.08%) stocks.
Our market should open flat to slightly lower this morning, we have seen an earnings report from Bank of Queensland – that showed a drop in earnings and dividend – which could cause the banks to fall. Technically, the XJO is sitting at the top of a pennant patter – if it pushes higher from here, we should see the index rise back towards the all-time highest close of 6,851.
To the downside, if the XJO can break back below some support around 6,630 and the moving averages around 6,600, it should continue to fall towards the gradual uptrend line around 6,550. Overall, the index has started to set some lower peaks, which may indicate that the upwards movement we have seen since the start of the year is coming to an end.
However, if the strength in the US continues, will will also likely continue higher.
CYBG Plc (CYB) was up +7.2%, as U.K. and European Union officials edged closer to a last-minute Brexit deal.
Afterpay Touch Group Ltd (APT) was down -7.2% after UBS initiated coverage with a Sell recommendation and a price target of $17.25, representing a -49% discount from the last close.
Southern Cross Media Group Ltd (SXL) was down -6.4%, after a broker downgraded the stock to Neutral from Outperform.
In Australia, data on the unemployment rate and participation rate is to be published. In the U.S., data on initial jobless claims and continuing claims is anticipated. In the U.K., we get data on retail sales.
U.S. equity markets eased overnight, led by energy and technology shares, as investors weighed earnings reports and retail sales posted an unexpected decline. President Trump said a trade deal will likely not be signed until he meets with Chinese President Xi at the APEC summit next month. The S&P500 was down -0.1%, led by losses in Energy stocks. The Dow Jones eased -0.1% and tech-heavy NASDAQ was down -0.3%.
Markets were shaken by unexpectedly poor retail sales, but an increase in bets on further Fed rate cuts helped markets stabilize.
We also saw further company earnings reports overnight which was a little mixed with Bank of America and Netflix delivering better than expected results, and IBM, Roche, and Abbott Labs disappointing. Technically, the S&P500 once again failed at the resistance of 3,000 – if that resistance breaks, the index could rise back to the all time highs around 3,020-3,040.
If the index falls from here, it could be expected to head back to some potential support at 2,960, followed by 2,940.
The market will likely to continue to move with company earnings reports, so watch what happens there.
European equity markets closed mostly lower as investors weighed contradicting reports on the progress made in Brexit discussions. Democratic Unionist Party Leader Arlene Foster dismissed reports that her party was close to dropping its opposite against to Boris Johnson’s latest Brexit deal. The Stoxx Europe 600 was down -0.1%, with a rally in Automakers mostly offsetting losses in basic resources companies. The UK FTSE 100 closed -0.6% lower, with declines in Miners dragging on the benchmark. German Dax closed +0.3% higher.
Asian equity markets closed mostly higher overnight on optimism of impending earnings results, although gains were trimmed after China threatened to retaliate if the U.S. offered legislative support to protesters in Hong Kong. The Shanghai Composite was down -0.4%, the KOSPI up +0.7%, and the Nikkei 225 closed +1.2% higher. Hang Seng was up +0.6%, with rises in property and finance shares after Carrie Lam announced new housing initiatives.
WTI oil price is trading at US$52.97 a barrel.
Iron ore prices are at US$91.96 per ton.
Spot gold is trading at US$1,490 per oz.