It is a big week in the US with lots of information to digest. From Earnings results to FED announcement, Fiscal Stimulus negotiations, and a hearing on antitrust in Big Tech.
Chief executives of Amazon, Apple, Facebook, and Google-parent Alphabet will testify before the House Antitrust Subcommittee at noon Wednesday following a yearlong probe into their anti-competitive practices.
The US FED and Government will likely give markets what they want which is more and more stimulus as the Coronavirus numbers remain high.
It was a big night for earning which a lot of companies also reported after the market. At this stage, out of the 149 in the SP500 that have reported – 113 beat expectations and 36 missed.
Despite seeing some red around markets lately the trend is still up and it seems more like a breather than the start of a pullback. Something big will need to charge to spark another pullback in markets, the selling we are seeing is more just profit-taking rather than another big fear bear market.
With negative leads from the U.S overnight, our market is set to have a soft open, putting us at roughly 6020. We will like likely test the 6000 level again today. U.S futures are green at the moment, and if they remain positive during our session today, we will likely hold both the uptrend line and the key 6000 level.
We have slightly disconnected from the U.S in the past few weeks with their market pushing higher than ours. This is not unexpected as we don’t typically rally as hard as they do, but often don’t fall as much either. Though in general if the U.S remains on trend we are likely to overall as well.
We continue to trade in the ascending triangle, with our lack of volatility likely caused by a reluctance to break both the uptrend line or the key resistance at 6175. There isn’t much room left to the point of the triangle, so we will have to break in the coming trading sessions. Regardless though, don’t expect volatility to return once we do, as there are no signs of it returning back to the market at this stage. Without a strong catalyst (likely from the U.S) it will probably just continue moving in lackluster fashion.
Fundamentally, things have soured in the short term with the U.S congress arguing over stimulus and if they don’t manage to reach an agreement soon, markets will likely send them a message. This is our immediate concern for the market but recent history has shown that governments are willing to do “what it takes” in order to keep markets and economies elevated.
US shares pushed lower overnight, with investors cautious as the Federal Reserve members met to discuss monetary policy. Poor earnings results from McDonalds, 3M, and Harley-Davidson also didn’t help prices. Leaders of big tech stocks are also fronting a congressional subcommittee tonight to discuss antitrust concerns as US lawmakers attempt to rein in anti-competitive business practices. Oil & Gas stocks, Basic Materials stocks, and Technology stocks were the weakest performers overnight, while the Utilities and Telecoms sectors both rose meaningfully overnight.
Technically, the S&P 500 index reverse the gains from the session before. Overall the index remains on an uptrend that has been characterised by higher peaks and troughs. There is a key resistance/support level around 3,230 and the index currently sits just below this level. If the SP500 can break higher from here it is quite possible that we see it climb back to the all-time high resistance at 3,400.