Our market has not enjoyed the recovery movements that US markets have experienced this week. We closed at our lowest closing level in nine months yesterday, with our XJO closing twelve percent from its February highs. We will open significantly higher this morning after the continued rally in the US, and with our futures up substantially. The key level to the upside is now some potential resistance around 6,500 – if we rise through that level, we will technically look likely to continue to recover. To the downside, a break below 6,250 would indicate another leg down in our market.
US stocks enjoyed another significant move overnight, this time rising substantially to the upside after the US Congress announced $8bn in virus related stimulus. The Dow closed 1173.45 points higher (4.53%) and the S&P 500 was up 126.74 points (4.22%). Asian and European markets were mostly higher as well.
Healthcare firms led the move higher in the US as investors applauded the stimulus measures announced by Congress. The US S&P 500 is now up over six percent this week. Markets also perhaps received a boost after Chinese officials announced an experimental vaccine for the virus (which hasn’t even been tested on animals), that they injected into one of their leading epidemiologists. Technically, the S&P 500 continued its recovery rally, climbing back above the key 3,100 index point level. The next level to the upside would be around 3,180-3,200. If that breaks to the upside, we could see the index head back to the all-time highs. If the index falls from here, the key level would be the sharp, short-term uptrend line that has formed since Friday’s lows; if that breaks, we should see another leg down for markets.
XJO Implied Volatility was up 1.96% and closed at 23.644. The US volatility fell 15.10% and closed at 31.99%.
US oil climbed a little overnight, prices remain depressed.
Gold rose slightly overnight, prices are at decade highs.
Iron ore jumped again overnight, prices remain far higher than most have been projecting.
The Aussie dollar rose relative to the US dollar. However, our dollar is still trading around decade lows.
What a difference a day makes. Big selling in the US was reversed into big buying. It would seem that investors are slowly gaining confidence that authorities will take sufficient measures to keep markets afloat amid the virus shutdowns. All of this negativity somewhat drowned out a really positive GDP read for Australia in Q4 2019 – which came in better than expected at an annualised rate of 2.2%. Obviously Q1 2020 will take a big hit from the fires and the virus, but it showed that perhaps things in our economy weren’t as bad as thought. Today we will recover somewhat, but future moves will again likely be directed by US futures.
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