Markets will be on edge today as we start to see votes counted. As the day progresses, we will be watching to see if there is a clear winner. At this stage, a Biden win will be an instant positive for markets, but some of his tax agenda could see markets back in the lower longer term. If we have a Trump win, markets could pull back for a day or two but once fiscal stimulus talks start again, markets will likely recover quickly. What could be the worst-case scenario short term here would be that there is no clear winner and fiscal stimulus is delayed further.
The RBA yesterday cut rates to 0.10 and committed to further bond-buying to ensure liquidity in the credit markets and to keep rates low. There is little more the RBA can do in the traditional sense at this stage. So it now is more about fiscal stimulus and getting the economy to reopen. The good news is that Vic is at only 38 active cases with another daily increase of zero. We are expecting further restrictions to be removed and more news of borders and businesses reopening.
Banks reporting has been mixed so far. BEN last week was a better-looking report than ANZ and WBC. WBC yesterday missed expectations. We have NAB Thursday 5th Nov and MQG Friday 6th Nov. CBA will give a trading update the next week.
The XJO is set to open flat to green this morning. Typically, we would expect a stronger open following both positive leads from the U.S last night and their futures this morning, but with the election today the market is likely holding its breath.
All eyes will be on the divisive election as poling numbers come in through our session today. We expect U.S futures to move heavily and therefore influence our market.
We remain trading in the broad channel between key resistance around 6200 and key support around 5800. We believe it is likely we break this channel by the end of the year, with large influences from the U.S election and our positive local data.
US shares jumped strongly overnight, ahead of the election results, which are due to start coming through in the next few hours. Markets appear to have rallied in anticipation, as there are usually strong gains in equities following a presidential election; this could be particularly true this time around, as the winning candidate is expected to prioritise passing a stimulus package in the coming months.
Some large tech stocks and particularly Alibaba were hit by the news that China was halting the Ant Group IPO, of which Alibaba owns approximately one third. However, tech stocks were strong in the main, as were Financial, Health Care and Basic Materials stocks. Oil & Gas stocks were the only major division to close lower.