Focus in the US is now shifting towards the election, and their market continues to show a willingness to edge higher. With the US at such a key resistance point, we feel that we could see some further sideways movement in the US.
Locally we are seeing a very mixed reporting season, at this stage the majority are missing expectations in the face of COVID-19 related issues. But some companies are shining bright, A2M beat expectations this morning with a 34% growth in earnings. Beach Energy (BPT) beat EPS expectations by 15% just to name a few.
The big four banks remain mixed, CBA came in around expectations and pretty much finished off the finical year paying around 3 quarters of their normal dividend. ANZ on the other hand will pay out a 25c interim dividend that they postponed in May. WBC will pay no interim dividend and NAB already paid out a 30c interim dividend in July.
Iron Ore also jumped again overnight sitting at 128 US at Chinese ports, this will help FMG jump again as the biggest company on the ASX that only mines Iron Ore. FMG will report Monday.
At this stage, sentiment remains strong around certain sectors and companies but uncertainty is holding the market back. We need the banks and other financials to recover if we want to see the kind of push up the US has experienced.
The XJO is expected to open flat following similar leads from both the U.S session last night and their futures this morning. The reluctance for our market to move one way or the other likely comes down to both technical and fundamental reasons, and the fact the U.S is tracking at their all time highs, uncertain at this stage whether to push through to make fresh ones.
We are trading in a broad ascending triangle, and a more immediate short-term channel between post fall highs of roughly 6175 and 6000. In addition, with the current reporting season the market is digesting both how the virus has affected businesses on our market, and their ability to recover over the next twelve months. Sometimes there are clear winners and losers, but other times its cloudy as to whether the value is there. Uncertainty due to the virus still dominates.
Questions around lockdown lengths, second waves, and timing on a vaccine or other alleviating medication have no definite answers and the next twelve months are uncharted territory that likely has investors on edge.
To combat this, stimulus from governments and central banks have been pumped into markets. We are in a new era of economics, or approaching it at least, much like how the great depression forced a shift of thinking and paved the way for 21st century economics.
In the short term, continue to trade with trends and be aware of company reporting dates.
US shares traded at their all-time highest levels overnight, with the S&P500 index also registering its highest close ever. It is a remarkable achievement given that the world continues to be wracked by COIVD-19, which along with the associated lockdowns, is doing significant economic damage. Massive stimulus and a weakening US dollar have helped prices reach these levels. There was an indication from Democrats overnight that they may budge on the stalemate over the next round of fiscal stimulus, but we will have to wait and see. Tech stocks again led the charge overnight, with some building stocks also showing strength as US housing starts and building permits came in better than expected.