Earlier this week we saw a switch from Tech into other sectors but overnight we saw a broad pullback. Tech did lead that move with the sector closing 5.83% lower. US markets did run a little hard without a pullback so at this stage, we are not seeing this as a start of a crash rather just a pullback in the trend. The SP500 held trend overnight, we will need to keep an eye on the key 3,400 level for confirmation.
Otherwise, nothing major has changed, we could see a sell-off for a few days, but at this stage, we cannot see this being the start of an overall market crash. Debt markets are looking ok bond yields are coming off a little. Oil, Gold, Copper, Silver, and other metals came off a bit overnight as well as crypto. So, this seems more like a broad profit take rather than fear selling.
This Sunday is critical for Australia as we learn a path out of stage four lockdowns whilst keeping the virus under control.
Thew XJO is set to tumble this morning following a sharp fall in the U.S last night. This selling is affecting every market and of course the question is, is this just a flash in the pan? Or perhaps indicative of further falls to come?
It is likely we will need to look to the U.S for the answer. Their futures are sitting lower this morning, but nothing excessive which perhaps indicates that this isn’t snowballing at this stage. It is likely we are just a victim of a market that was just overbought, especially in tech, and the fall is just profit taking and a healthy move back to the uptrend.
Both markets continue to trade in broader uptrends, so we maintain that bullish to sideward view until we see a change in trend, portrayed by lower peaks and troughs. We have key support around here at 5900 and 6000 so our market should help be buoyed against falls. In addition, the AUD came off last night which should help some of our market’s largest companies.
US stocks plummeted overnight, with the largest fall seen in months. Tech stocks saw the heaviest selling as investors began to question the lofty valuations. The strong selling came despite jobless claims data coming in better than expected overnight.
The selling overnight caused the VIX volatility index to rise to its highest level since June. Technology stocks were by far the worst performers overnight, with the DJ Technology index falling around six percent overnight. Every other major sector saw strong falls, with the smallest levels of selling seen in Telecoms and Oil & Gas stocks.