Saudi Arabia overnight agreed to cut production more than expected which saw Crude push to $50.20 US a barrel. It now sits at $49.84. This saw the energy sector up 4.53%, it was the value space that led the market higher overnight. (Materials, Industrials, Energy.)
The Georgia runoff election is in full focus. Many are expecting a pullback in the market if the Democrats win both seats, but value stocks will likely quickly bounce back pushing the market higher. A Democratic win will likely see more government spending and therefore stocks like JHX, CSR, BSL will all benefit. Commodities also will likely continue much higher.
Starting in 2021 the market will be focused on-
• US senate runoff elections
• Covid-19 Cases vs Vaccine roll out
• US company reporting
• China relations
• What actions will Joe Biden take after Jan 20
• Any more Central bank spending or Government stimulus
Our market is clearly on an uptrend but is struggling to push much higher than 6,700 at the moment. This was a key support level for the market back in 2019 as well and is now holding as resistance. As we get on the other side of the Georgia election the market will likely break either higher or lower.
In the medium-term markets look set to continue to trend upward. The market right still is a balance between Virus, Stimulus, and Vaccine; we expect shares to continue to recover with company earnings into 2021. Do keep an eye on the Australian dollar, however, with gains in the AUD potentially holding our market back.
As a vaccine becomes more prevalent and more economic activity opens up, we would expect this to positively influence share prices; we, therefore expect shares to in general continue higher for the longer-term.
US shares resumed their rally overnight, with key Senate elections in the state of Georgia that will likely determine which part controls that house of government for the next two years. Stocks rose with commodities, indicating that there is continued optimism around an economic recovery.
US economic data showed better than expected manufacturing data, as well as a drawdown in oil inventories. Oil & Gas and Basic Materials stocks were by far the strongest sectors overnight, while Telecoms were the only stocks to close lower on average.