The XJO appeared to break its short-term uptrend yesterday, but held support at 6,700 index points. If 6,700 breaks the market should eventually fall back towards the 6,630 support, if that breaks, 6,500 would be the next key target to the downside for our market. If the XJO can reverse and break resistance at 6,750 – we should see our index head back to the all-time high close around 6,851. The market may remain buoyed in anticipation of an RBA rate cut next Tuesday, which seems to have helped our financial stocks over the past few days.
Afterpay Touch Group Ltd (APT) was up +13.3% after media reports that the Company provided its confidential interim report of external auditor Neil Jeans to Austrac. The report did not provide any recommendations which will be left to the final report. As previously reported, the Company has not identified any money laundering or terrorism financing activity via its systems to date. Pro Medicus (PME) -5.8% and Beach Energy (BPT) -5.6% were both lower on little company news flow.
US markets closed higher after Trump reversed his tone on trade, stating that a deal with the Chinese was getting closer and closer. The Dow closed 162.94 points higher (0.61%) and the S&P 500 was up 18.27 points (0.62%). European and Asian markets closed lower.
Trump changed his tune on trade overnight after lashing the Chinese the night before. He said there was a good chance that a deal could be reached, and praised the Chinese for purchases of items such as beef and pork. It seems Trump is trying to balance keeping markets high with pressure on the Chinese. Technically, the S&P 500 rose from some potential support around 2,955. If the S&P 500 continues to rise from here, the next level of resistance is 3,020. However, the index may now be forming a short-term downtrend and if it breaks 2,955, it should fall to 2,840.
XJO Implied Volatility fell 0.84% and closed at 13.015%. The US volatility was up 6.58% and closed at 15.96%.
Crude fell overnight on signs that US crude supplies were rising.
Gold pulled back strongly overnight, with a bit more optimism around trade.
Iron ore was stable overnight, with some metrics rising. However its still holding below the $100 USD per tonne resistance level.
The Aussie dollar fell further overnight, ahead of expected RBA rate cuts on Tuesday.
It looks set to be a fairly flat day of trading here, after US markets pushed higher with a little more trade optimism. The moves around the changes in Trump’s tunes are becoming less decisive however, as markets seem to be waking up to the fact that he’ll probably say whatever is most beneficial to his desired outcomes at that point in time – with markets coming off yesterday, he shored them up by being more positive. Regardless, markets all seem to be starting to come off highs, and economic fundamentals have largely been weak. Our market should hold up until at least Tuesday however, in anticipation of another RBA rate cut. Rates are expected to go to 0.75% here, and it is worth noting that the RBA is running out of room for conventional monetary policy.