We knew this was coming, it was just a matter of when, and last night the talks of US fiscal stimulus heated up. Everyone is calling for some form of relief bill to be passed before Christmas. The Democrats and Republicans were at a lock on this issue coming into the election but with the senate back after a break, we will hear much more on this in the coming weeks.
So, with the combination of good Vaccine news and hopes of further fiscal stimulus, US markets continued to push into blue skies. Locally our market is set to also continue higher.
Locally things are positive, virus numbers are almost non-existent, and borders are reopening. The China Australian tensions are a big deal for Australia though. We will continue to see some volatility in various areas of the market if things continue to worsen.
The big change overnight was a large move back into Gold and Silver. This seems to be attached to Stimulus talks as not much else changed overnight. Bonds, Oil, and the USD all fell, as Equities, Iron Ore, and Metals all rose strongly.
With the U.S breaking into all-time highs last night, our market is expected to share in the gains on open this morning. We are expected to open near 6625, putting us back above the 6600 level of support.
From here, we eye our post fall highs near 6750, a modest target if the U.S maintains its strength. On the other hand, it would be fair to expect volatility to remain as we often have a dip at the start of December to allow for a run into Christmas. Rather than make fresh local lows, instead we may just track sideward.
News remains positive, with market media keeping its magnifying glass on the virus and the vaccine. Cases continue to rally out of control in the U.S, but locally it has remained under control enough that borders are opening up and governments are providing incentives for travel. If things remain on track, the only major issue our market will face is a rising AUD/USD which puts pressure on our miners.
US shares had a strong session overnight, with fresh record highs seen across the board. The gains were driven by increasing speculation around a long-awaited fourth US fiscal stimulus package. The latest on that front was a message from President Elect Joe Biden to Congress, urging them to pass a stimulus bill.
House Speaker Nancy Pelosi also announced a new proposal for a stimulus package, with Republicans also apparently circulating their own plan. Fed Chair Jerome Powell also fronted congress overnight, warning that the US economy remains damaged an in an uncertain state. Technology stocks were again the strongest performers overnight, while financials and basic materials also rose strongly. Every other major sector closed higher to some degree.