The US markets completely reversed the pullback last night, with the SP500 breaking the 3,400 level. Three key bits of information helped markets hold gains. FED Chair Powell and the ECB (European Central Bank) reconfirmed their very accommodative stance flagging there could be more easy money to come this year. President Trump also did some back peddling on his comments about stopping negotiations for more fiscal stimulus.
Markets continue to whip are all over the place, with most markets whipping around for the last few months. The sentiment in the US is still very mixed for the month ahead as there is a lot of key news to come. US quarterly reporting is kicking off next week and US elections early Nov. They are still meeting on a fiscal stimulus bill, which could also affect sentiment in the short term.
Our market is expected to open flat to higher this morning, following positive leads from both the U.S session last night and their futures this morning. If their futures remain in the green during our session today, our market should at least retain the positive open if not push higher through the day. This however, will be harder to achieve than the past few days as the U.S finished at key resistance last night.
Our market on the other hand, broke through key resistance at 6000 yesterday. The next broader target is our post fall highs at 6200 which we have failed to push through at least four times in recent history. On the path there, our market will also face minor resistances basically every 50 points – a common occurrence when you have had a sideward market for so long.
The 50,100, and 200 moving averages have also converged around 6000. This is no coincidence of course, as this level has acted like a magnet for our market over the past few months. The convergence of these averages should keep our market around these levels until we see a solid break. Once this occurs, we can have more confidence of continued push to 6200.
US shares rose overnight, with Trump somewhat reversing his tune on stimulus, indicating he may pursue a piece-by-piece approach by passing one item of stimulus at a time, which markets liked. Trump also indicated he though there should be support for airlines, which the market saw as a willingness to help businesses affected by the virus.
Overnight there was little in the way of economic data, but we did see oil inventories increase by more than expected, which did cause some selling in oil. Materials and Healthcare stocks were the strongest performers last night, while every other major sector did close higher.