The XJO has thrice now failed to close above its resistance at 6,750 – after testing it on Thursday, Friday, and Monday; the market is otherwise maintaining its uptrend, formed over the past month. If the XJO can break above 6,750 – we could see a move back to the all-time high at 6,851. However, a break of the uptrend could see our market fall back towards the 6,630 support and possibly lower. Despite US markets peeling off their resistance levels, our market has kept pushing up – if they do keep coming down in the US, I imagine we will soon follow.
IOOF Holdings Ltd (IFL) surged +12.0%, after Macquarie Bank upgraded recommendation on the stock to Outperform from Neutral and raised the price target to A$7 from A$5.8 on increased likelihood that the Company could complete its OnePath deal. Premier Investments Ltd (PMV)was up +5.8%, after multiple brokers upgraded the stock on the back of growth in its Smiggle unit. Webjet Ltd (WEB) was down -3.5%, after the Company reported that Thomas Cook’s compulsory liquidation will impact FY20 results via loss of total transactional value (TTV) and unpaid receivables exposure.
US markets closed flat. The Dow closed 14.92 points higher (0.06%) and the S&P 500 was down 0.3 points (-0.01%). European and Asian markets mostly closed lower.
US markets are continuing to drift off resistance levels. The S&P 500 may have found some support around 2980 overnight, so that is the level their market will need to break for further bearishness to be confirmed. Exceptionally poor European manufacturing data overnight shook markets, but then some Fed members came out and stated that the Fed would act if needed to support growth (implying further possible rate cuts), helping US markets off their lows. If the S&P 500 can rise and close above the previous high of 3,025 index points, we should see further gains.
XJO Implied Volatility was up 1.12% and closed at 13.124. The US volatility was up 5.77% and closed at 14.91%.
Crude has started rising a bit, after a couple of days sell-down last week – crude prices remain elevated since the disruption to supply at Saudi Arabia’s oil fields.
Gold rose again and is now a fair distance above the 1,500 USD support.
Iron ore bounced a bit overnight, but importantly – it is holding below resistance at $100 US a ton.
The Aussie dollar was fairly flat overnight – overall its holding its downtrend.
Our market has been fairly resilient across the past few sessions, with falls seen elsewhere not impacting our market. Part of this seems to be the expectation of another RBA rate cut on the 1st of October, another reason is that US futures usually rise after their market closes lower, meaning that the lower leads we see from the US are partially offset by the expectation of a higher US open. RBA Governor Philip Lowe will speak in Armidale tonight and some are expecting him to signal the cut below 1 percent; with rates at one percent there is only so much more room to work with however. Given the current bullish move on our market there is a fair chance we will head back to the all time highs around 6,850, and possibly even higher. However, with risks mounting in the global economy, weak economic fundamentals at home, and little room for more monetary stimulus, I feel there is much more room to the eventual downside.
Today’s trading. In the U.S., data on FHFA house price index to be published. In Japan, leading index CI and PMI data is anticipated.