Overnight news that an experimental vaccine created by U.S. biotechnology company Moderna Inc showed signs that it can create an immune-system response to combat the new coronavirus. This saw world markets surge higher. This adds to other positive news seen out there as parts of the world economy continue to ease lock down restrictions.
So, at this stage markets have what they need to remain stable.
• Low interest rates with the view they are going lower
• Bond buying, to keep the Credit markets ticking along
• Increased unemployment benefits and programs to help keep staff employed that would have lost their jobs otherwise
• Hints of further stimulus on the way.
If the market jumps too quickly here, we need to be careful as they could become very heated very quickly and see much of it given back. Remember if a trend is extremely steep, it tends to only last a short period of time. A slow and steady trend can often last month if not years.
Earnings sentiment is still exceptionally low with many analysts downgrading expectations. If sentiment continues to increase around lockdown relief, we could see a shift here later in the year. But for now things are expected to be fairly negative in the July – August reporting seasons.
With powerful leads from U.S markets overnight, expect our market to get back to at least the top of the channel today. Our futures indicate a strong open that puts us just about there.
Whether we break through or hold will probably be anticipatory on the U. S’s session tonight as they are trading at their own key resistance, and therefore would likely need to look to their futures during today’s session.
Overnight US markets jumped strongly higher with positive results for an experimental vaccine and gains in crude oil. It was the strongest gain for the S&P 500 in almost six weeks and it came despite a warning from the IMF overnight that the economic recovery from the coronavirus will take much longer than expected. We will also see Fed Chair Jerome Powell speak tonight with many expecting him to present a case for further fiscal stimulus as well as elaborate on his views around negative interest rates.
Gains were seen on every major US sector overnight, with oil and gas stocks the standout performers, financials and materials also performed extremely well, but the recently strong healthcare and technology sectors were quite muted in their gains.