Markets continue to remain bullish, albeit in lackluster fashion. We are grinding higher as the hard fight between the bulls and bears weighs on during these historic times.
In one corner, we have a second wave in Victoria, unbridled infections in the U.S, and bad economic numbers. In the other we have unprecedented stimulus and 21st century economic textbooks being hurled out the window.
The bulls are hitting harder at the moment but the bell hasn’t rung.
With U.S markets rallying last night, our market has positive leads for its open. We should open around 6075 – the highs of yesterday. U.S futures sit currently flat, and if they remain so or dip into the red during our session today, our market will struggle to push much further than its open or even hold this morning’s gains.
Comparing the charts of the SP500 and the XJO, they look almost identical since the beginning of June. Last night’s strong move puts them just underneath their local high, the equivalent of our 6200 level. The move may not be reflected that strongly in our market today because we are sitting at roughly equivalent levels over the past month (though the U.S market has had a much greater move from March lows).
Yesterday our market held 6000, which is now key support. The next move for our market should be back to 6200 and potentially beyond, but we will need to see continued positive influence from the U.S.
Not much has changed in the way of news that we don’t already know: Virus cases in Victoria continue to grow rapidly, and it is far worse in the U.S where it is virtually left unchecked in many states.
Regardless, negative news at this stage is not stopping markets from continuing higher. We need to look to U.S reporting coming soon which will be the first test for markets.
US shares pushed strongly higher overnight after they traded for the first time since Thursday last week. Tech stocks were the standout performers, with the NASDAQ trading at an all-time high. US stocks are about to head into an earnings reporting season with earnings expected to come down dramatically; if those earnings are worse than expected and/or the forecasts for the next few quarters are lowered, it will be hard for US shares to rise further from here.
Tech was the standout performer overnight, but other sectors performed well including Basic Materials and Financials stocks, Utilities were the only major sector to close lower.