The mood around markets continues to remain subdued as Covid numbers continue to climb overseas. Many countries around Europe and the UK are going back into some form of lockdown, after reopening over summer. Locally though we are expecting Victoria to see restrictions eased again this week. Sunday’s announcement was delayed until tomorrow as they await to see the results of a cluster in the northern suburbs. We could see something announced earlier after there were no new cases yesterday.
There is still plenty of room for movement in our market considering we were at 7,000 pre-Covid and we are seeing the US play with all-time highs. It seems there are only a few things holding markets back. One is the uncertainty around the US elections next week and two we are still waiting for Vic to reopen. US fiscal stimulus will also play a large part in markets resuming the uptrend.
The XJO is expected to open flat this morning. The U.S Friday had a modest rise, and their futures are slightly in the red this morning, so our market has not much to go off.
We continue to track sideward near the top of the range, with the market unwilling to stray too far from 6200 at this stage.
Fundamentally, not has changed either with focus on Biden’s lead going into the election Tuesday week and the resurgence of the virus in Western Europe and America. In addition, roughly one third of the SP500 and Dow are expected to report earnings this week.
On Friday US shares pushed marginally higher. Trading was again subdued, with markets nervous ahead of the US elections and with a lack of further action on stimulus, but they did close higher and they did close at the highs of the day.
US stocks are also in an earnings reporting season at the moment, with this week set to be one of the most important; 183 of the 500 stocks on the S&P 500 index will report this week, potentially affecting market movement. This reporting season has one of the highest ‘beat rates’ (companies exceeding their earnings expectations) ever. However, unlike regular season, an earnings ‘beat’ hasn’t necessarily been enough to force prices higher this time around.