US Dow Jones and SP500 rally not led by Tech was a refreshing change after many large Tech companies are starting to look a little overdone. All sectors closed in the green other than Energy. Utilities led the way, up 3.12% with Real Estate, Materials, Health Care and Communication services rising more than 2%. This should help lead a further rise in the Australian market after we disconnected from the recent rally in the US.
Locally the focus is shifting to leaked documents that have people speculating on when Vic will come out of lockdown. At this stage, many are expecting Vic to stay in stage four until the end of September, two weeks longer than originally indicated. Sunday we will receive more details on a path forward for Victoria which will hopefully give our market a much-needed hit of positive sentiment.
The AUD is expected to continue to rise to around 80 USD on the back of the FED meeting last week. We saw some weakness on the local market on the back of this, but a rebound is definitely now in play, with the big question of whether we can break 6,200 this time around?
With strong leads from the U.S overnight our market is set to open higher just above 6100. This puts us back in the tight range we were trading in previous to the large fall we saw a couple of days ago.
A fall in the AUD last night is likely to help us sustain the gains we are expected to open with, taking pressure off our miners and a few other key major companies in our market. The fall in our dollar could be put down to worse than expected local GDP data yesterday (which officially put us in recession) leading to the speculation of further stimulus from our government and RBA. Indeed, yesterday’s strong rally was also likely contributed to the GDP release.
Technically, our market remains in an uptrend, though with the fall we saw couple of days ago the uptrend line was broken. We continue to assume bullish to sideward movement until we see otherwise.
US shares rose to another fresh all-time high overnight, with the major S&P 500 index recording its largest gain in nearly two months. It’s the sixth all-time high in the past seven trading days recorded by the index.
Economic data was mixed, with US factory orders data for July coming in better than expected, while a measure of job creation showed fewer jobs created in August than expected. The US authorities have also told citizens to prepare for a vaccine for the virus by September. November is also the US presidential election, but there are still plenty of questions to be answered as to whether it will proceed as scheduled.