October 23, 2019
OVERNIGHT MARKET SNAPSHOT (as at 7:30am AEDT)
US Stock Indexes were higher early in the session but could not hold onto the gains into the close as Brexit turmoil continues. Mixed earnings reports had buyers subdued early although happy to push the DOW up 100 points until the Brexit vote late in the session pushed markets lower into the close to end the session in negative territory. Boris is still having issues with getting a Brexit deal done by the end of October. He initially won a vote on the deal only to lose a second vote on the timeline for the deal just minutes later. It now seems that parliament is happy to wait and see how the EU respond and whether they will want to delay Brexit and for how long. The DOW closed down 0.15% while the broader SP500 was down 0.36% and the Nasdaq ended down 0.72%. In Europe, Indexes were subdued ahead of the Brexit vote and are expected to play catchup when they re-open for tonights session while mixed earnings reports also held prices in check into the close.
Safe haven buyers have edged back into the markets via USD, Bonds and Gold as Brexit and trade continue to hang over economic growth. A trade deal between the US and China continues to drag on but seems to be on good footing as both parties talk up progress. Brexit also continues to drag on and be hampered by politics. Europe will continue to struggle as long as investors remain uncertain as to the direction of the zone. To add to the potential pressure, impeachment ramps up on Trump as a top aid testifies that Trump made the release of security aid to Ukraine contingent on Kiev publicly declaring it would carry out politically motivated investigations.
The USD was initially heading lower but then managed to make back all the lost ground on a spike thanks to the Brexit ‘no’ vote. The buying pressure on the dollar may continue if recent buyers into the Pound and Euro continue to be squeezed and forced to close positions. The EURO spiked lower on the Brexit news as the dollar rallied across the board in a safe haven move away from the uncertainty in the EU. The GBP was initially on the way up on hopes that the vote will get through parliament but price stumbled to give up all the gains and drop over 120 pips from the highs. There is a lot of room to move lower and squeeze out long positions if it becomes more likely that another delay is on the cards. The AUD also reacted lower after the news but was already finding some selling pressure up at resistance around 0.6890 which is the previous key highs from September. The USDJPY moved lower on the brexit vote even as the USD moved higher as safe haven YEN buyers stepped into the action to outweigh the dollar buying.
Gold found a minor safe haven bid thanks to continued Brexit uncertainty although buying was contained due to a rally into the dollar. The trading continues to be contained around the $1500 zone on the futures market so we are still waiting for a clearer direction. Crude Oil saw some early buying pressure to push price up into the 54.90 resistance zone. We expect to see further buying pressure if trade talks continue to move forward. Copper is finding selling pressure up at the 2.650 zone to cap the buyers. We may see a deeper correction play out into the commodity, down through 2.630 if dollar buying continues.
Cryptocurrencies were relatively unchanged in a mixed session as Bitcoin holds above the 8000 level currently trading at $8123.1 down 0.81%. Ethereum is also slightly lower at $172.21 down 0.65% while Ripple is higher and trading at $0.29403 up 0.95%.
The ASX200 started the session yesterday a little choppy as sellers were squeezed out of the action early before the Index settled into the close to end up 19.7 points to 6672.2. The best performing sectors were in Materials, Resources and Metals and Mining while Gold stocks continued to come under pressure. Falling stocks outnumbered advancing ones by 592 to 551 and 326 ended unchanged.
The ASX200 is expected to open flat to down 5 points as the SPI200 had a mixed session overnight.
ECONOMIC DATA OUT TODAY (AEDT)
AUD RBA Assist Gov Kent Speaks 9:20am
JPY BOJ CPI Data 4pm
EUR Consumer Confidence 1am
USD Crude Oil Inventories 1:30am
SPI200 INTRADAY LEVELS TO WATCH
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