US markets continued their advance as did stimulus talks. Markets are hooked on stimulus at the moment. This week the 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. We are also seeing signs of negotiations for more fiscal stimulus.
Next week we have the US reporting heating up, this will be the first quarter of reporting that will capture the brunt of the coronavirus. It will be interesting to see how many companies will be willing to give forward guidance.
Today we will see China reopen after a week-long holiday. We assume we will also see Iron Ore futures reopen. This could see a move in the big 3 miners around mid-day today. Iron Ore was volatile before the holiday but managed to jump 5% a day before the close, finishing at around $123US. All in all, in the short term we could see the volatility continues, but we still expect demand to outweigh supply even though we are seeing Vale slowly come back into the market.
With positive leads from the U.S last night and their futures this morning, our market is set to have a soft open just above 6100. With a break of key resistance last night in the U.S, our market may have the confidence to move higher today, especially if their futures remain in the green during our session. On the other hand, our market broke the 6000 level yesterday, pre-empting the U.S break, and one should question how much higher we are willing to move with out them doing so first.
Technically, our market looks set to test our post fall highs at 6200. This would complete the double bottom technical pattern, and follow through the broader channel we have been trading in for the past few months.
The rally over the past few days has been rather out of character for our market. During that time, Trump has caught the virus, and put an end to stimulus talks. The mood change may have been brought about by local positive news around the budget and low virus numbers, plus the U.S not selling off in any significant measure.
We have had four straight days of buying, with today set to mark a fifth. Expecting a sixth or seventh starts to feel increasingly unreasonable without a breather, so do not be surprised if we see a lacklustre day today or Monday with some kind of pull back.
US shares rose overnight, with the major S&P 500 index reaching its highest level in five weeks. The talking heads for the US market continue to ascribe market gains to hopes on fiscal stimulus, but overnight there was fairly conflicting news on negotiations for the fourth US fiscal stimulus package.
The gains came despite mostly mixed economic data overnight, with continuing jobless claims better than expected, but with new jobless claims being worse than expected. Oil & Gas stocks were the best performers overnight, with the sector rising strongly with oil prices. Every other major sector closed higher except for Telecoms.