Overnight we saw the US SP500 and DOW take a breather whilst the NASDAQ creeped higher. Markets seem to be taking a breather as they await confirmation of further fiscal stimulus. Gold pushed higher overnight as it seems a stimulus deal is nearing. Every time we see big stimulus from the US, Gold comes back into play. Silver also tracks Gold which also moved higher overnight. With Gold being smashed down of late we are likely to see further moves higher if the US stimulus is approved.
With US daily cases and deaths still high and with markets overheated, we will need Stimulus and Vaccine news as a catalyst to keep markets rising. A breather here for a few days makes sense, but a stimulus deal needs to get across the line this week before the senate goes back on holidays.
Iron Ore continued higher overnight but miners in their ADR’s offshore took a breather. If Iron Ore continues to hold these levels our big 3- BHP, RIO and FMG are very cheap at current levels. Iron Ore can take seasonal moves so we could see the price of Iron Ore come crashing back down early next year. But for now, enjoy the uptrend.
With flat leads from the U.S last night but red futures this morning, our market is expected to open slightly in the red near 6650. Our market seems to be hanging around 6666 once more – a level that acts like a magnet, much like the 6000 level.
Despite U.S making all time highs, their futures let us down yesterday as we gave up most of our gains by close. We clearly also bounced off our post fall highs of roughly 6715, not willing to push through with out further permission from overseas.
We will need continued strength from the U.S to push through our post fall highs, otherwise we will likely continue to trade in the ascending triangle, or break lower and move back towards 6500. With such a stella November, many commentators are less certain of a typical Santa rally, instead expecting softer gains for the month.
Regardless, the market has much to be positive on. Locally our industries and borders are opening, and the news of a vaccine continues to roll out. The U.S will continue to focus on the virus, but will also start increasing its focus on stimulus by year end.
US shares ended their winning streak overnight, with the financial press blaming virus concerns for the selling. The S&P 500 fell from an all-time high, but the NASDAQ 100 rose for its ninth consecutive session, its longest winning streak in a year.
Many are still expecting the US politicians to negotiate a long awaited fourth fiscal stimulus deal by the end of the year, but they are running out of time, with two weeks to go before the houses break for the holiday period. Markets are also patiently awaiting an FDA ruling on the Pfizer + Biotech vaccine, which could start being distributed within 24 hours of approval. Oil & Gas stocks were the weakest performers overnight, ending some strong gains for the sector. Basic materials, financials, and healthcare stocks also closed lower.