Coronavirus lockdowns saw European markets close very weak overnight, which lead US markets lower on the open. But with the combination of strong reporting and stimulus talk, we saw the US reverse.
It seems the mood locally is improving despite China’s tensions. The lower AUD along with the RBA talking about lower rates and the budget last week is seeing us test the key 6,200 level. The strong Bank reporting in the US is also helping our Financial sector recover.
It seems that other industries are starting to see China slow or are changing buying habits. The ABC reported today that mills in China are being told to stop buying Australian cotton, stoking fears cotton could become the latest agricultural product to be subjected to tariffs.
But in the next few weeks, it is all about the US election. At this stage, Biden is winning in the polls, and markets seem to be very receptive to a Biden win. Which is a bit of a change to what many were thinking only a few months ago.
The XJO is expected to have a soft to lower open, following mixed results from the U.S last night and flat futures this morning.
We seem to have stalled here at roughly 6200, the post fall high of our market, and top of the channel we have been trading in since June. Yesterday our market tried to break through but with negative U.S futures during our session, pulled back to release half the days gains by close. This may spell that we need the U.S to either reach their all time highs, or break through them for our market to have a convincing break.
The past several times we reached these levels our market fell. The fact we have not pulled back from these levels the past few days shows willingness for our market. This may be on the back of the positive budget, and low Victorian case numbers.
US stocks closed slightly lower again overnight, which was the third session of selling for the average US stock. However, stocks did climb well off their lows to finish only slightly lower, as Democrat Congress leader Nancy Pelosi stated that Democrats wouldn’t wait until January for the long awaited fourth round of US fiscal stimulus. US economic data was a bit mixed overnight, with an unexpected increase in jobless claims, but better than expected manufacturing and oil inventory data.
The lower oil inventories sent Oil & Gas shares higher, while financials also enjoyed some strength. Healthcare, Telecoms, and Technology stocks were the weakest performers.