Markets continue to shake off Fridays sell down as President Trump is expected to be discharged from the hospital today. Overnight we saw strong movement across the board, Crude, Gold, Silver, and other metals were up. All Sectors closed in the green with Energy being the standout. Bonds saw some selling, seeing the 10-year yields pushing higher.
This is indicating, for now, a risk-on attitude towards equities. We must keep in mind that coming into the election, markets will continue to whip around in a volatile fashion.
The sentiment in the US is still very mixed for the month ahead as there is a lot of key news to come. US quarterly reporting is kicking off next week and US elections early Nov. They are still meeting on a fiscal stimulus bill, which could also affect sentiment in the short term.
Today we will have the RBA announcing rates today, some were speculating they could drop rates further this year. Then tonight everyone will be focusing on the government budget. Many items of the budget have already been released, but we will get the details tonight.
With positive leads from the U.S overnight, our market is set to open higher this morning, near 5970. U.S futures are flat to slightly in the red, and if they remain so during our session, we are likely to have a lacklustre session.
Yesterday, on the back of strong U.S futures, we priced in most of the move we saw from last night. For us to push much higher than here, we will likely need to see further gains from overseas.
The expected open should put us near the key resistance at 6000. Where we go from here will likely depend on the U.S. The downtrend line, with this morning’s expected move, will likely have broken. If we make it to 6000, then our market will have failed to make a lower trough and peak, which is a positive sign for the downtrend finishing. Instead, we look to the more medium term pattern of the channel between roughly 5750 and 6200.
US stocks closed strongly higher overnight, with their strongest daily rise in a month. Stocks were boosted by the news that US President Trump was recovering well and that he would shortly leave the hospital. Investors also mentioned that they hoped President Trump’s firsthand experience with the virus would increase his interest in helping to push through the fourth fiscal stimulus package.
There wasn’t much in the way of US economic data last night, but European economic data, including retail sales and services PMIs were all extremely positive. Technology, Oil & Gas, Healthcare, and Basic materials stocks were the strongest performers overnight, with every other major sector also recording gains.