US markets jumped 10% in November, but the US is only 1.7% higher than the all-time high created in September. Locally though, we have seen real gains through November, rising 8% from the breakout of the channel. So, the short-term markets are a little overbought but there is still plenty of upside potential between now and Christmas.
Positive Vaccine news is seeing the continued sell in Gold and safe-haven assets like government bonds. Which is keeping investors on the buy-side of equities and other riskier assets.
Locally, the virus is remaining contained and is seeing the reopening of state borders. Also, news that fewer than expected are claiming Keepers allowance, which has people talking that the economy is recovering quicker than expected.
The main two negatives to watch out for in the local market are the China – Australia’s relationship and the AUD which continue to push strongly higher. China has on Friday introduced tariffs of up to 200 percent on Australian wine over complaints it is being dumped. The Australian government is using the official channels through the WTO to try and find a resolution. But if this truly is China putting pressure on Australia to act on the 14 demands then things are likely to get worse. There doesn’t seem to be any room to move on most of the 14 demands as some will put our sovereignty at risk. TWE went into a trading halt and will be addressing the market today or tomorrow.
Our market is clearly in an uptrend and remains strong. US markets just joined back in on the move higher are testing all-time highs again. If the US futures push into all-time highs today we could see another strong rally.
The XJO is expected to edge higher on open following flat to positive leads from the U.S Friday and continuing the overall bullish sentiment the past month has experienced. U.S futures sit flat this morning providing no leads for how our session may shape today.
If our market holds the gains, it is likely we see a move to 6666 as it has acted as a strong magnet for our market historically like the 6000 level. 6600 should again act as support in case we are dragged back today, like it did on Friday last week.
The U.S failing to push through to make new highs and holding resistance should invoke caution for traders. If they fail here, the falls are likely to extend to us as well.
The AUD/USD rallying will likely keep pressure eon our miners and a few other key players in our market, but strength in Iron Ore and general positive market sentiment should help mitigate this.
US shares rose during their half-session on Friday, although movements were small as traders and investors slowly returned from their Thanksgiving holiday. There was plenty of talk of vaccines once again, with US officials stating that any regulatory review for a COVID vaccine would be heavily expedited. This vaccine talk led the VIX volatility index to its lowest level since February.
Investors are now looking for any indication of further stimulus, with a small two-week window in December for the US houses to pass a stimulus bill before end of year. We will also see Fed Chair Jerome Powell speak twice this week, with investors anticipating an update on the bond buying program.
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