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FRIDAY MARKET SNAPSHOT
- SPI200 (Dec) overnight futures up 39 pts to 6782
- SP500 up 0.23 pts to 3168.80
- NASDAQ up 17.56 pts to 8734.88
- Dow Jones up 3.33 pts to 28,135.38
- FTSE100 up 79.97 pts to 7353.44
- DAX30 up 61.08 pts to 13,282.72
- GOLD futures US Session (Feb Contract) up $8.90 to $1481.20 an ounce
- COPPER futures US Session (Comex Mar) down $0.013 to $2.784 a pound
- OIL futures US Session (Nymex Jan) up $0.89 to $60.07 a barrel
- CRB Index up 0.89 pts to 183.81
- AUDUSD trading at 0.6876
- EURUSD trading at 1.1121
- GBPUSD trading at 1.3331
- USDJPY trading at 109.3800
- USD Index US Session (ICE Dec) down 0.206 to 97.178
In the US, major indexes opened the session pushing into new all time highs before sellers came in to lock away some gains into the weekend leaving the indexes to close around even for the session. Buyers were buoyed by news from both sides of the trade agreement in which the US will suspend $160 billion in tariffs while China will increase purchases of US farm goods by around $32 Billion. Buyers were not so keen to add further risk to the action as the deal offered no specifics on quantities that China agreed to buy prior to the close. News after the close specified the plan for purchases over the next two years and also mentioned that the deal will be signed in January with a date and time to be announced soon. The DOW closed up 0.01% while the broader SP500 was also up 0.01% and the Nasdaq ended up 0.20%. In Europe, Indexes saw buyers continue to jump into the action on positive trade news and also as they digested PM Boris’s commanding victory in the elections which is expected to bring more clarity to the UK’s planned exit from the EU. Traders across the globe are happy that the two biggest risks weighing on the markets – Trade and Brexit – have been lifted for now. Traders will now be watching for further details on the trade deal and policy follow-through for Brexit negotiations.
China has also pledged in the agreement to better protect US intellectual property, to curb the coerced transfer of American technology to Chinese firms, to open its financial services market to U.S. firms and to avoid manipulation of its currency.
The USD bounced back from an early morning beating where the USD was pushed straight through support on the UK election result and trade news to sap the safe haven demand for the dollar. The move looked a lot like a ‘stop loss hunt’ in the major currencies as many pairs traded at key levels and the subsequent action into the dollar was bullish. The EURO spiked into resistance on the Dollar move only to give up the gains and move back down to where it started. The GBP spiked hard on a clear cut conservative win which opens the doors, finally, to a Brexit resolution to get the economy and business investment back on track. Unlike the EURO, the Pound managed to hold onto most of the gains as the USD bounced back from the selloff. The USD move also triggered the AUD to push up through resistance around 0.6925 to trigger some buy stops before price fell back down and closed below the level. Buyers were not willing to hold the trade sensitive Aussie for long as they have been burnt in the past from believing in a deal only for it to fall apart. We expect to see the AUDUSD open strong as specifics of a phase 1 deal were released after the close. The USDJPY initially moved higher on the Dollars fall as safe haven YEN buyers exited to offset the dollar losses.
Gold rallied as the Dollar fell; although we expect to see the safe haven bid into gold dissappear thanks to the phase 1 deal; while Crude Oil got another lift from the trade news. Expect to see further buyers step into oil on an expected lift in demand and OPEC production cuts. Copper was choppy around highs as recent buyers were happy to lock away some gains. We expect to see further support for the metal as a phase 1 deal is digested by traders.
Cryptocurrencies were relatively unchanged over the weekend but continue to be under longer term pressure with Bitcoin currently trading at $7130.5 up 0.54%. Ethereum is at $143.05 up 0.76% while Ripple is trading at $0.21854 up 1.28%.
The ASX200 ended the week on a positive note and is expected to continue the bullishness today. The index ended Fridays session up 30.9 points to 6739.7 as the IT, Financial and Resources sectors dragged in the buyers. The Gold sector came under pressure although we may see buyers looking for some bargains today as Aussie Gold rallied into the weekend. In saying that, it will be important to watch Golds opening price as trade deal specifics may take some shine out of the Aussie gold rally. Rising stocks outnumbered declining ones by 667 to 448 and 315 ended unchanged.
The ASX200 is expected to open up 40 points as the SPI200 closed out the week on a high. We may see more strength on the open as the phase 1 deal specifics hit the wires late after the close.
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ECONOMIC DATA OUT TODAY (AEDT)
CNY Fixed Asset Investment, Industrial Production, Retail Sales and Unemployment Rate 1pm
EUR French Flash Services and Manufacturing PMI 7:15pm
EUR German Flash Services and Manufacturing PMI 7:30pm
EUR Flash Services and Manufacturing PMI 8pm
GBP Flash Manufacturing and Services PMI 8:30pm
USD Flash Services and Manufacturing PMI 1:45am
GBP Bank Stress Tests Results and BOE Financial Stability Report 3am
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SPI200 INTRADAY LEVELS TO WATCH
