The Morning Jumpstart

OVERNIGHT MARKET SNAPSHOT (as at 7am AEST)

  • SPI200 (Sep) overnight futures down 48 pts to 6452
  • SP500 down 23.14 pts to 2900.51
  • NASDAQ down 54.25 pts to 7948.56
  • Dow Jones down 173.35 pts to 25,962.44
  • FTSE100 down 64.65 pts to 7125.00
  • DAX30 down 64.19 pts to 11,651.18
  • GOLD futures US Session (December) up $5.80 to $1517.40 an ounce
  • COPPER futures US Session (Comex Sept) down $0.0260 to $2.5750 a pound
  • OIL futures US Session (Nymex Dec) up $0.13 to $56.34 a barrel
  • CRB Index up 0.12 pts to 170.90
  • AUDUSD trading at 0.6778
  • EURUSD trading at 1.1100
  • GBPUSD trading at 1.2166
  • USDJPY trading at 106.2600
  • USD Index (ICE Sept) trading at 98.032 down 0.189

The US gave up some of the recent gains as bulls took a breather and locked away some gains. Financial shares were hit as Wall streets rally came to an end as traders await comments from Fed Reserve Chairman Powell at the end of the week. A fall in US Bond Yields again pressured the action which led to a risk off tone into equities. Expectations are for a Dovish Fed speech and for Powell to address the recession signs and hint at a rate cut to follow in the footsteps of European stimulus. The DOW closed down 0.66% while the broader SP500 was down 0.79% and the Nasdaq also ended down 0.68%. In Europe, markets were also weaker as they have to contend with continued uncertainty with the Italian government as Prime minister Giuseppe Conte resigned meaning Italy is heading to elections. This led to a fall in Italian sovereign bond yields and pressure in local markets.

Bond yields may come back into focus and the inverted yield curve as news services talk up a recession but that will depend on the Feds speech on the current state of affairs with the economy. Trump was out to support the markets (to help with the 2020 elections) saying his administration was looking to cut some taxes but that he was not talking about doing anything imminently. Some investors believe that a tax cut plus calls for lower interest rates are a sign of wavering confidence in the US economy and adds to the perception that there is concern.

The USD moved lower in line with a rally in Bonds as yields came under pressure. Price was pretty much contained in the dollar until the US open where sellers came on to pressure the action lower. The Euro reacted to the USD move to rally and build support at 1.1070. The move may give bulls some short term reprieve if price holds a higher low to squeeze sellers. The GBP was initially under pressure with sellers driving price lower to the 1.2070 zone before buyers staged a rally on USD weakness to make back the losses. The AUD also reacted to the dollar weakness although the action was more contained as buyers and sellers matched out to flatline price. The USDJPY found further safe haven buying to move up and pressure the dollar lower. Price will need to hold current levels around support at 106.200 for bulls to see a retest of the highs. If not, continued pressure on the dollar and further safe haven buying could see USDJPY move down to 105.75 lows.

Gold traded higher as safe haven buyers were back into the action as bond yields rallied and put pressure on markets. Oil also managed to rally being helped by USD weakness and as global stimulus hopes offset concerns over future demand and helped to reverse early losses. Copper continued to hold lower highs and pressure price into support. Buyers bailed once the higher low at 2.5860 from the previous session was broken. Price continues to see an economic slowdown equate to lower demand for the metal. Until either the trade war finds a solution and/or stimulus helps stop the decline in global growth, we expect the selling pressure to continue.

Cryptocurrencies were mixed as Bitcoin found some buyers while others were weaker. Bitcoin is currently trading at $10715.8 up 0.37% while Ethereum is at $196.30 down 0.94% and Ripple is trading at $0.27354 down 1.33%.

The ASX200 opened stronger yesterday and trended higher into the close to end up 77.6 points to 6545. All sectors were up accept Gold which again came under pressure as traders locked away some gains and gold continued to test support. The best performing sectors were Energy and Consumer Staples. Rising stocks outnumbered declining ones by 681 to 476 and 364 ended unchanged.

The ASX200 is expected to open down 45 points as the SPI200 fell away from the days highs overnight.

ECONOMIC DATA OUT TODAY (AEST)

AUD MI Leading Index 10:30am

GBP Public Sector Net Borrowing 6:30pm

CAD CPI Data 10:30pm

USD Existing Home Sales 12am

USD Crude Oil Inventories 12:30am

USD FOMC Meeting Minutes 4am

SPI200 INTRADAY LEVELS TO WATCH