Broad selling in Europe carried over to the US overnight as France and Germany brace for further lockdowns. It seems that Western Europe, the UK and the US are experiencing a large rise in daily cases as they come into their winter months. As lockdowns get introduced markets will want to see more and more stimulus to balance out the sentiment.
Overnight President Trump announced again that there will not be a fiscal stimulus deal made before the election. At this stage, the US market is likely reacting to stimulus news more than anything else. With the election only next week we are likely to see things remain volatile as markets look for some certainty.
Every time we see the fiscal stimulus in the US get kicked out in time there is big selling across the market, we saw selling in across all sectors, but also into commodities including gold and silver. At this stage, it is hard to predict how long the fear selling will last.
But with the election only next week and with things looking much better locally, we are still looking at his as a buying opportunity. But we must be patient and find where the bottom of this move is.
ANZ reported today, which came in as expected. They are reducing the number of loans that are on holiday and only saw a 6% reduction in revenue and a 29% drop in cash profit which includes one-off impact charges. More bank reporting this week. WBC Monday 2nd Nov, NAB Thursday 5th Nov and MQG Friday 6th Nov. CBA will give a trading update the week after.
With a strong sell off in overseas markets, the XJO is expected to fall to around 5975 on open. U.S futures are in the green this morning, and if they remain so during our session today, will help stem the bleeding. Indeed, we may see our market hold around 6000 if this holds true.
Otherwise, we are in for a decent fall today. If we remain below 6000, the next target is 5900 and beyond that is the bottom of the channel at roughly 5800.
Regardless of our positive news locally, fear selling led by overseas markets has settled in for now, and with the U.S election around the corner, expect volatility to continue.
US shares tumbled overnight, falling the most in four months as high virus cases and the rapidly approaching presidential election weighed on investors. The US is currently experiencing a big surge in the coronavirus and many have stated that there will need to be further fiscal stimulus to deal with the economic fallout, yet this has been postponed substantially because of the election, leading to market volatility.
Indeed, the VIX volatility index, a measure of price volatility, rose to its highest level since June overnight. Company earnings reporting, which is currently ongoing, also isn’t the usual bright spot for US shares, even if they beat market expectations. Every major sector fell strongly overnight, with technology and Oil & Gas stocks the hardest hit.