It is common for a market to take a breather at an all-time high level, and what a more important time than now for the US markets. With the election around the corner, Coronavirus uncertainty and uncertainty around US fiscal stimulus. As we also know US markets at this stage have mainly been led by Tech and Communication services.
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. Out of 91 companies that have reported 40.6% to have beat expectations which is an improvement from the last read and 27.47 have seen EPS growth.
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.
With positive leads from the U.S last night our market is set to open higher. Considering the U.S is tracking along their all-time high resistance level, our market is reluctant to break through our post fall high at roughly 6200 at this stage.
We continue to trade in a broad ascending triangle, with a more immediate consolidation range between 6000 and 6200. The 200 day Moving Average is also acting as a bit of resistance for our market, but considering the trend, these levels should eventually break.
Our market continues to digest the current reporting season, which is perhaps part of the formula of why our market has lagged so far behind the U.S which is sitting at roughly our equivalent of 7100.
Next week is another big week of reporting which may help push us one way or the other.
In other news, Victoria case growth is the lowest in over five weeks. This is a relief economically and socially as lockdowns have proven effective, giving hops (at least in the short term) that the six week lockdown wont be extended.
Overnight US stocks pushed back up, closing higher overnight despite a weak open. US shares managed to rise even after some fairly weak economic data, which showed that jobless claims and manufacturing were weaker than expected. Tech shares led the strength overnight, with the NASDAQ 100 index closing at a fresh all-time high.
Every other major sector did push lower overnight, with Oil & Gas stocks and Utilities stocks the worst performers. Since the US has closed, Chinese officials have stated that they expect another trade deal with the US soon, which seems to have improved sentiment on futures markets.