Markets continue to edge higher maintaining trends set over the past few months. Apple and Google releasing contact tracing technology helped an already improving sentiment this week.
At this stage markets have what they need to remain stable.
- Hopes of a vaccine
- Low interest rates with the view they are going lower
- Bond buying, to keep the Credit markets ticking along
- Increased unemployment benefits and programs to help keep staff employed that would have lost their jobs otherwise
- Hints of further stimulus on the way.
Earnings sentiment is still exceptionally low with many analysts downgrading expectations. If sentiment continues to increase around lockdown relief, we could see a shift here later in the year. But for now, things are expected to be negative through the July – August reporting seasons.
The XJO is poised to open up slightly near 5600 as of writing, but this could certainly change by market open. I suggest this because leads from overseas are underwhelming; the U.S slightly pushed through their channel last night, in no significant measure, and the U.S futures currently sit flat.
Given where U.S and local markets are, it is hard to predict how we will fare today. If we see strong gains in U.S futures, it should push us through the top of our channel today, but otherwise I do not see us making a clean break.
US stocks rose again overnight with investors buoyed by the prospect of US states easing their lockdown restrictions. Stocks did pull off their highs however as the US senate passed legislation that would make it harder for Chinese companies to list on American stock exchanges. The gains came despite minted from the Fed Reserve meeting in April being released, which showed the bank was extremely concerned about the effects on the economy and financial stability due to the coronavirus, with the minutes suggesting that Fed officials don’t expect a rapid recovery.
The overnight gains came from every major US sector overnight, with Oil and Gas stocks rising with the most gusto, closely followed by Tech stocks. Healthcare, Telecoms and Utilities were all muted in their gains.