The XJO looks set to recover some lost ground today, with the futures up nicely and the Australian dollar flat. A realistic target might be the all-time highest close of 6,929, set on Friday. If the XJO can break above 6,929, we would expect further upwards movement – perhaps even the nice round number of 7,000; which will not be reached today, but may be reached at some point in the current upwards movement. If we fall and close below 6,880 – we may head back to the next support at 6,775. Watch for movements in the Australian dollar as well as US markets when trying to pick the direction of our market – the XJO has recently enjoyed a falling AUD.
Lithium producers such as Orocobre Ltd (ORE) gained after China signaled it will not further cut subsidies for electric vehicles. The media is reporting that AMP Ltd (AMP) may need to consider full or partial sale of AMP Capital. Perenti Global (PRN) is reported to be interested in Downer EDI (DOW) mining services unit. Resolute Mining (RSG) is in discussions to sell Ravenswood for ~A$300m. Event Hospitality (EVT) noted regarding bushfires, the Company was notified from the NSW Rural Fire Service and NSW National Parks and Wildlife Service, its Thredbo Alpine Resort can resume summer operations from Jan. 14.
US markets continued their push higher overnight, with the S&P500 setting another record high. The Dow closed 83.28 points higher (0.29%) and the S&P 500 was up 22.78 points (0.70%). European markets were mostly lower, whilst Asian markets were mixed.
In an encouraging move for investors, the US removed the ‘currency manipulator’ tag from China ahead of tomorrow’s signing of the ‘phase one’ trade deal; the show of goodwill is adding to the belief that the trade tensions are abating. Tech stocks were the heaviest lifters on the US markets. Technically the S&P 500 set another all-time high. The index seemed to bounce from the previous all-time high resistance of 3,260 yesterday, which now is acting as support. Given the S&P 500 has bounced off 3,260 we would expect it to continue moving higher, although its hard to say exactly where it may head – 3,300 doesn’t seem too unlikely though, given markets like round numbers. If 3,260 breaks to the downside we could see the index head to 3,200. US markets are just starting a reporting season, with earnings expected to be growing, but only just.
XJO Implied Volatility was up 3.22% and closed at 11.556%. The US volatility fell 1.79% and closed at 12.32%.
US oil closed lower again, it has been coming off since the US-Iranian tensions subsided somewhat.
Gold fell overnight, reversing some of Friday’s gains.
Iron ore bounced back overnight, prices are higher and are looking bullish.
The Aussie dollar rose slightly against the US dollar, which may hold back the XJO a little today.
Today’s trading: U.S. data on inflation and weekly/hourly earnings are expected to be published.
We look set to rally back to our all-time high today, but with the Australian dollar rising, it is unlikely we will break through. The US reporting seasons heats up tonight, with a host of large bank reporting – how that eventuates will likely effect our market tomorrow. Otherwise, markets are looking forward to the signing of the ‘phase one’ trade deal between the US and China, which is set to be signed Wednesday evening our time.