We are set for a flat to weak day to finish the week off. This is not surprising to see after an 8% move higher in the past two weeks. Any further move higher is likely to be slow from here and a small pullback is healthy.
Many news outlets this morning are blaming the virus numbers in the US for the pullback. At this stage, we believe the market is getting used to this type of information. The US FED and government have walked down the path of stimulus to battle the economic impacts of Covid. Therefore, as the virus gets worse we should see more talks of stimulus which will push markets higher again. Markets tend to be more of a weighing machine. Many people looking at many economic and other factors before buying or selling.
• Stimulus and Very accommodative central back policy
• Biden Victory without a majority in the senate
• Covid-19 Vaccine.
• Economic Recovery underway
• Australian State Borders start to reopen
• Australia China trade issues
• Lack of overseas travel
• Strong AUD
• Trump not conceding
Our market is set to open flat to lower this morning near 6400 following negative leads from the U.S last night. Their futures have pushed into the green, and if they remain so during our session today, will help keep us buoyed.
Outlets are reporting on renewed virus fears, and though a big issue in the U.S, it likely that markets are simply taking a breather following a strong run on the back of the election. Further falls may occur, but this is natural and healthy in any bull run.
In contrast, through sacrifice Australia has managed to rein the bane of 2020 under control, with Victoria now two weeks free of any recorded cases. Unfortunately, if the U.S market falls on the back of virus issues, then our market will likely get dragged down with it. Hopefully, our positive local outlook will help keep us buoyed against excessive falls.
Overnight US shares ticked off a bit. With shares around all-time highs after the post-election rally and virus cases remaining high, some profit taking is unsurprising. We did see better than expected US jobless claims overnight, which could help assuage some concerns about the virus’s impact on the economy.
We also saw a build-up in US oil inventories, which hurt oil prices and the energy sector. Oil & Gas was the worst performing sector overnight as a result, while basic materials, financials, and utilities also fell strongly. Technology, telecoms, and healthcare also closed lower, but to much smaller degrees.