November 8, 2018
OVERNIGHT MARKET SNAPSHOT (8:05am AEDT)-
The US had a strong night to finish higher as buyers found some relief after midterm elections divided control of Congress. US bond yields fell as traders are now left to assess what the ‘power divide’ will mean to spending and borrowing in the coming year. Democrats won control of the House of Representatives and Republicans cemented their majority in the Senate which led to a risk on move. Traders will now view any further tax cuts and deregulation as unlikely for now as focus will now turn to the US Fed which is due to release its policy decision tonight where expectations are that interest rates will be left on hold until December. The DOW closed up 2.13% while the broader SP500 was up 2.02% and the Nasdaq was up 2.64%. In Europe major Indexes found buying support as the uncertainty over US elections subsided and traders were happy to put back on some risk into equity markets and focus on earnings.
The divide in Congress now gives the Democrats the opportunity to block Trump’s agenda and open his administration to intense scrutiny. A split Congress has historically been bullish for equities.
The USD was initially lower through the European session and then buyers stepped in to support the currency and push it up into the close of the US to finish only slightly weaker. The dollar found support from rising US bonds as traders still see demand for some safe haven buying. The EUR, the AUD and the GBP were all higher on the USD weakness although the majors are still looking bullish.
Gold was relatively unchanged in a choppy session as the USD moved from losses to gains leading the precious metal lower into the close. Oil continued the move lower on Iranian sanctions and on a stronger USD. The US recently granted eight countries exemptions to continue to buy Iranian oil without penalties from the US which saw traders reposition themselves and close bought positions. Copper managed to bounce on the potential for less regulation and a hampering of Trumps ability to put through further tariffs on Chinese imports. Traders focus may now be back on dwindling physical stockpiles of Copper which may see buyers step back into the market.
Cryptocurrencies were relatively unchanged overnight as Bitcoin holds around $6558.2 up 1.26%. Ethereum is trading at $218.48 up 0.69% and Ripple is at $0.53559 down 0.13%.
Locally, the ASX200 rebounded from earlier losses to close the session up 21.7 points to 5896.9. Advancing stocks outnumbered falling ones by 629 to 517 and 337 ended unchanged. Markets were still contained as traders awaited the results of the US elections. Australia is not expected to react much to the elections although the unknown was again keeping buyers on the sidelines.
The ASX200 is expected to open stronger up 40 points as the SPI200 rallied overnight on the back of a strong US market. Although midterm elections are not expected to have a direct impact on Aussie shares, the improved sentiment in the US will flow over into the ASX200.
ECONOMIC DATA OUT TODAY (AEST) –
JPY Current Account and Bank Lending 10:50am
CNY Trade Balance and USD-Denominated Trade Balance Tentative
EUR German Trade Balance 6pm
EUR French Trade Balance 6:45pm
EUR ECB Economic Bulletin 8pm
EUR EU Economic Forecasts 9pm
USD Unemployment Claims 12:30am
USD FOMC Statement and Fed Funds Rate 6am
SPI200 INTRADAY LEVELS TO WATCH –
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