Overnight investors move back into Gold with the US dollar falling. In addition, we saw US Crude oil prices back below $40US. Energy was the weakest sector in the US overnight, followed by financials. All sectors were in the red except communication services.
This is the first time we have seen a switchback into gold and out of the US dollar in a few weeks. Gold is looking technically bullish short term, but we are looking for a break back above $1,910 for confirmation.
This morning at 11am AEST we will see Trump and Biden have it out a political debate. Many will be watching to try and predict who will win the election in early November. At this stage, markets are widely expected to remain whippy yet volatile into the election.
Locally the budget next week will give us insight into which sectors to back coming into next year. We want to see big government spending, and further government stimulus to help job creation. Also, we have seen a hint that the planned income tax cuts could be bought forward.
With the U.S taking a breather last night following strong rallies, or market is expected to do the same today. We are expected to open roughly 30 points lower near 5920. U.S futures sit in the green, and if they remain so during our session today, should help keep are market buoyed from over extending.
Out key support now lies down at 5800, with 5900 also being a key level but less relevant at this stage. We are still potentially trading in a downtrend, but it has either finished, or is shallowing out. Time will tell, but the recent strength is a positive sign of recovery.
The U.S media is focusing its gaze on the U.S election even more, with Biden and Trump debating at roughly 11:AM AEST. The market wants a clear winner regardless, which will help remove uncertainty. Be mindful that if one doesn’t pull ahead, it could spell unease and a potential risk-off atmosphere.
US shares fell overnight, with the flagship S&P 500 index ticking slightly lower. Analysts blamed the lack of an update on the fourth fiscal stimulus package, as well as a little political uncertainty over the first of the presidential debates tonight.
However, given the US markets had rallied strongly for the past three sessions, its possible they just wanted a breather. Overnight every major sector closed some degree lower, with Oil & Gas stocks the weakest after falls in oil; oil prices fell despite an oil inventory read showing a greater drawdown in inventories than expected. Healthcare was the best performing sector and closed relatively flat.