Many European markets saw reversals last night after the ECB hinted at more stimulus in December. This is the typical response we have been seeing this year. The virus gets worse which equals more stimulus. We expect the same to happen in the US after the election.
But it seems the US election is still overshadowing good sentiment locally. We will see the election play out next Wednesday morning in Australia. So once again our market will be open whilst we see each state finalise their counts. Last time our market moved in a massive range on the day, but the US markets did not see the same level of volatility.
More local bank reporting next week. WBC Monday 2nd Nov, NAB Thursday 5th Nov and MQG Friday 6th Nov. CBA will give a trading update the week after.
Despite strong leads from the U.S, our market is set to open flat to lower near 5950. This is largely because U.S futures sit strongly in the red this morning. If they turn around during our session then we are likely to rise. Otherwise, expect a flat to weak day.
The volatility leading into the U.S election was expected and will likely continue through it. Locally, news remains positive, but not enough to keep us buoyed against the fear selling from across the water.
Technically, we remain in the channel, and right now are hanging roughly near the middle. There is support at 5900, and resistance at 6000, so today is up for grab as we likely head towards one of them. Our market won’t channel forever, and usually a strong catalyst (like a U.S election) is needed to push prices one way or the other. Expect a break of the channel between now and the end of the year.
US shares regained some lost ground overnight, with economic data showing stronger than expected GDP growth in the September quarter. Jobless claims data was mixed overnight, but the closlely followed initial jobless claims figure was better than expected. While it was the strongest day for the S&P 500 index for two weeks overnight, it paled in comparison to the selling the day before.
Hurting sentiment further was an Apple earnings report aftermarket that sent Apple down over 4% in aftermarket trading and has helped to push US futures significantly lower. Oil & Gas, Technology, and Basic Materials stocks were the strongest performers overnight, while Health Care was the only sector to close lower.