The message out there is clear that there is still plenty of people who want to be invested in equities right now. The question is where and what do you invest in when the Dow and S&P500 are already only 7% off their all-time high in the middle of a pandemic? Well at this stage Tech!
Stocks like AMD which manufacture CPUs up 7.16%, Amazon up 3.30%, Electronic Arts up 2.35%. These are all companies that sales come from either entertainment, online shopping, or technology that can be used online.
So, there is no surprise to see a lag in the XJO compared to the US markets. In particular the Nasdaq that is made up of a lot of companies that will likely benefit from Covid-19.
Locally sentiment is being guided by a combination of China tensions, Victoria locks down and the hopes of further stimulus with Tax cuts likely to be bought forward and the Keeper / Seeker allowance being extended. Furthermore, the banks are also allowing people under financial distress to extend repayment holidays.
The XJO is expected to have a week open this morning following negative leads from the U.S last night. Their futures sit in the green this morning and if they continue to do so will help keep our market from falling too much today.
We are tracking sideward; simply following the U.S. Without much more to go on we look to their reporting season which starts Monday to get leads on where markets are going. Considering this, our market is likely to have a lackluster session today without too much movement either way.
Our key levels remain in play, with 6000 being somewhat of a magnet, switching between being support and resistance. If we do push higher, we have interim resistance at 6100 and the local high of 6200. If we fall, we have the uptrend line immediately to help keep us buoyed, but if that fails, we look to roughly 5800.
Overnight most US shares closed lower, with the Dow and S&P 500 finishing firmly in the red after Walgreen’s boots reported earnings-per-share that was much worse than expected. The tech-based NASDAQ index did close higher however. The selling came despite an economic report showing that US Jobless claims were better than expected. Financials stocks were some of the hardest hit, with Wells Fargo stating that it was prepared to cut thousands of jobs due to the economic situation. Oil & Gas stocks were sold down to an even greater degree, with WTI crude pushing back below $40 US/barrel. Tech stocks were the only real positive performers.