Markets are looking for a reason to move higher or lower. We saw a hint of that yesterday when markets dived after Peter Navarro’s comments around the China Trade deal. Trump quickly hit twitter which saw markets move back to where they started.
At this stage we are looking for the next catalyst, end of financial year is approaching so we could see some strange movements coming into next week.
Where to from here? It will come down to a few key bits of news,
- What will governments and central banks of the world do to continue to stimulate?
- How badly have companies earnings been hit?
- How quickly can we get economy’s reopened?
The US government hinted that they will be voting on new stimulus measures in July. At this stage the discussion is around a targeted measure which could see another cash payment directly to people.
Low earnings sentiment continues to be the theme as we edge closer and closer to US reporting season in July. The market is generally expecting low earnings this year, so we will be looking at reports through a different lens. We will be looking to see if companies will report better or worse than expectation. Reporting season as always can be volatile for individual companies so keep an eye on the reporting dates.
With mixed leads this morning our market is set to open slightly higher. The U.S was up last night but their negative futures this morning will likely damper our positive open.
Yesterday we failed to push through 6000, a major key level for our market. Today we will test it once again. To push through, we will probably need to see the U.S futures push higher in anticipation of a break of their level tonight. This is not likely as last night they rebounded off the top of their range which indicates they are not yet ready to break consolidation. What is more likely is continued subdued trading for our market.
US shares pushed higher again overnight, with the NASDAQ tech index reaching a fresh all-time high. There was a bit of a pullback right around the close, which did dampen the spirits of investors. Reports of persistently high COVID-19 infections likely helped US shares to pull back from their daily highs, with Dr Anthony Fauci, the US’s top infectious-diseases official stating that the virus wasn’t taking a summer break; many had hoped the warmer weather would slow the virus’s spread. Still, with stimulus helping to drive the gains of the market, it seems that there are plenty of traders and investors happy to continue buying. Tech and Healthcare stocks were the strongest performers overnight, while utilities and telecoms were the weakest.