Our XJO fell to the 6,800 level before rising a fair degree yesterday. The market looks set to open around 6,700-6,750, at which a fair degree of support sits, as does the 12-month uptrend line that has formed since February 2019. With fear driven falls such as we are currently experiencing, it is hard to say where selling might end. Other potential levels that could support the market are the 200-day moving average around 6,700 and the 10 percent correction level just under 6500. 6500 is also a key longer term support level, so if the selling continues that may be the level to watch.
US markets plummeted again as their officials warned that a spread of the coronavirus to the US was inevitable. The Dow closed 879.44 points lower (-3.15%) and the S&P 500 was down 97.68 points (-3.03%). Asian and European markets mostly fell as well.
The US S&P 500 index has now lost 7.5% of its value in four days as virus fears dominated headlines. Strong US futures were quickly reversed as their market once again finished the session significantly lower. A series of sensational headlines, such as the CDC warning that the coronavirus was likely to spread to the US, and the Olympic officials warning that Tokyo 2020 was uncertain should the virus continue, rocked markets and sent them tumbling. Technically, the S&P 500 fell back towards the key 3,100 level, If this level breaks – 3,000 would be the next target – which would be just beyond the 10% correction range.
XJO Implied Volatility was up 7.32% and closed at 17.26%. The US volatility was up 38.67% and closed at 27.85%.
US oil slammed lower again overnight.
Gold dipped overnight despite the viral selling. Regardless, prices are extremely strong at these levels.
Iron ore dipped a little, but iron ore prices are actually holding up extremely well.
The Aussie dollar dipped slightly against US dollar – our dollar is around decade lows.
Our market will head significantly lower today, following US markets down. Sentiment has certainly shifted in the marketplace regarding the virus, but not much has changed from a week ago. The big issue continues to be the shut-down in parts of China, and the flow-on effect to the supply chains of many businesses. It is likely that this will negatively impact growth in the first quarter of 2020, which will be a drag on stocks, but with extremely accomodative monetary policy, and much fiscal stimulus around the world – the drivers that have pushed stocks higher for the past 18 months remain. Our own RBA is expected to cut rates in either March or April, which will certainly help to support our market.