Our market looks set to follow US markets higher today, with our futures closing strongly higher. Our rate of infection has so far been below that being seen around the world, and I suspect this is helping our market slightly outperform many other world markets. Technically our XJO is in an ascending triangle pattern, between resistance at 5,300 and a small uptrend that has formed over the past fortnight. A break of either the resistance or the uptrend line will likely indicate a further move in the direction of the break.
US markets rose strongly overnight with Trump claiming to have brokered a oil production cut agreement with Saudi Arabia and Russia. The Dow closed 469.93 points higher (2.24%) and the S&P 500 was up 56.4 points (2.28%). European and Asian markets also rose yesterday and overnight.
Many in the markets were quite skeptical about Trump’s claim to have convinced Russia and Saudi Arabia to cut production, with neither nation confirming his claims. Regardless, a jump back in oil prices eventuated and that is largely considered a positive thing for markets at the moment. The rally came as US jobless claims rose by more than six million, and with the number of coronavirus infected rising above one million individuals. Technically the S&P 500 index seemed to rise off some potential support around 2,500. The next level to the upside is some potential resistance around 2,600-2,630, should that break, we should see further gains for our index. To the downside, if the market breaks below 2,500, there are additional potential levels of support at 2,400 and 2,250.
XJO Implied Volatility was up 5.45% and closed at 43.115%. The US volatility fell 12.08% and closed at 50.91%.
US oil jumped substantially, with Trump announcing he had brokered a deal between the Russians and the Saudis.
Gold rose strongly overnight. Prices in Australian dollar terms (given the fall in the AUD) remain extremely strong.
Iron ore bounced back overnight, reversing some of its recent losses. Prices remain quite strong.
The Aussie dollar again fell against the US dollar overnight, prices remain fairly weak but have recovered a fair bit from the lows.
Our market looks set to have a strong finish to the week, with US markets rising in the face of negative news. Most likely the markets received a boost from Trump’s claim to have made a deal between the Saudis and the Russians, but if no deal materialises, the gains could quickly be lost. Those gains could be lost anyway, due to American unemployment. The American consumer has driven the global economy for much of the 20th and 21st centuries, and the longer they are out of work and locked up in doors, the worse the global economic situation will become.