Tech stocks led a move lower overnight after the US government pushes for Facebook to divest Instagram and WhatsApp. We also saw Gold and Silver selloff after uncertainty arose around the US fiscal stimulus. The pull-back in the Tech heavy Nasdaq was something to take note of but the DOW and SP500 were only down slightly.
The market in the medium term is a balance of Virus, Stimulus, and Vaccine. So as long as we can see further positive news on the Stimulus and Vaccine front markets will likely continue to edge higher into Christmas.
Iron Ore port prices jumped to over $150US per tonne. Dalian futures also popped higher overnight, to levels not seen since 2013. The miners at these prices are still cheap with Iron Ore up here. Don’t forget that costs to BHP, FMG, and RIO have dropped dramatically since 2013. FMG is still sitting at around a 10 PE. But the miners in their ADR’s offshore continue to take a breather, so the miners could continue to edge sideways in the short term.
The XJO is expected to fall on open back to 6700, giving up all of yesterday’s gains. This follows a fall in the U.S after making fresh highs.
We broke out of an ascending triangle yesterday, but after such a strong run, a pullback is not too surprising. If we can hold 6700, it will be a sign that we are using the previous resistance as a support and that the retracement might be short lived.
We should expect things to remain positive, yet markets are showing signs of running out of gas. The U.S will need to pass a stimulus bill in the coming weeks, but don’t seem any closer to a deal. At this stage, this hasn’t rocked markets, but if the stalemate continues this could change.
US shares closed lower overnight, with fairly negative news around the prospects of fresh stimulus for the US economy. Republican and Democratic lawmakers are yet to resolve their deadlocks around business liability and aid to local and state governments.
Most in the market had been expecting the fourth stimulus package by the end of the year, but with just over a week until politicians go on holiday, the prospects are dimming. Markets are also watching the US Food And Drug Administration, who are expected to rule on the suitability of the Pfizer + BioNTech vaccine this week. Tech stocks were by far the worst performers in the US overnight, while Telecoms, Basic Materials, and Oil & Gas stocks were the sectors that closed higher.