The XJO pulled back on Coronavirus worries following the Hang Seng and other offshore markets lower. At this stage, we continue to hold the 7,000 as support. The short term uptrend has broken but the market continues to hold sideways at 7,000 for the moment. For our market to break out of this phase we will need to either see a cure for the Coronavirus or a strong reporting season. So at this stage, markets will continue to react to how companies report and how the Coronavirus continues to progress.
US markets closed higher after a rally in the last hour of trade. The Dow closed 124.99 points higher (0.43%) and the S&P 500 was up 10.26 points (0.31%). Mainland China remains closed for Lunar holidays, Hang Seng closed 2.32% lower and the European market also closed mainly lower.
Overnight we saw US GDP come in as expected at 2.1% and strong reporting help push the tide back to positive. Amazon smashed expectations with EPS coming in at 6.47 compared to the expected 4.05. Also we saw the market rebound after the World Health Organization declared a global health emergency, but at the same time, did not recommend travel to China be restricted and said the country had the situation under control. Keep an eye on this space as things continue to play out over the next few weeks, as we are continuing to see the death toll rise and declared cases increase on a daily basis. Good reporting continues to offset the negative news from the Coronavirus, keeping markets sideways for the moment. Support for the S&P500 is around 3,210 and the upside resistance is at 3,337 which is the all-time high.
The reported cases and death toll continue to rise sitting at 177 from the Wuhan Coronavirus, the Virus has now surpassed 8,000 cases worldwide.
XJO Implied Volatility fell -7.88% and closed at 13.507. The US volatility fell -5.10% and closed at 15.49%.
US oil fell again but managed to reverse to hold support.
Gold jumped overnight and prices remain near all-time highs.
Iron ore fell into the Chinese Lunar holidays and will remain closed for most of this week.
The Aussie dollar continues to slip sitting at 67.23
The markets could see a small reprieve from the World Health Organization comments. US markets reacted to the fact that they did not recommend travel to China be restricted. At the same time people tend to be cautious around things like this, so there will still be an affect to many companies around the world. Today’s move higher may be only temporary as we continue to see cases increase by around 2,000 per day. If that worsens we will see further volatility in markets.