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OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 2/07/20 (as at 7:15am AEST)
- SPI200 (Sept) overnight futures up 42 pts to 5945
- SP500 up 15.57 pts to 3115.86
- NASDAQ up 95.86 pts to 10,154.63
- Dow Jones down 77.91 pts to 25,734.97
- FTSE100 down 11.78 pts to 6157.96
- DAX30 down 50.36 pts to 12,260.57
- GOLD futures US session (Aug) down $21.20 to $1779.30 an ounce
- COPPER futures (Comex Sept) up $0.019 to $2.733 a pound
- OIL futures US Session (Nymex Aug) up $0.44 to $39.71 a barrel
- CRB Index up 1.17 pts to 139.14
- AUDUSD trading at 0.6915
- EURUSD trading at 1.1252
- GBPUSD trading at 1.2475
- USDJPY trading at 107.4600
- USD Index US Session (ICE Sept) down 0.224 to 97.125
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The broader US index and tech heavy Nasdaq moved higher while the DOW lagged as traders weigh up the possibility of further stimulus. The market was supported by the extension of the small business loan to companies in need as concern over the increase of virus cases continues. The market is slowing waking up to the idea of a Biden victory come November 3rd as Trumps poll numbers have nosedived. Many see headwinds for the market as under Biden’s presidency as taxes are expected to be increased which will in turn weigh on corporate earnings. This would drive investors out of US shares and hurt the USD. As we get closer to the elections, we expect to see pressure on the dollar as long as the polls show a Biden victory as a lot of the positives for the USD are already factored into price. Do not expect to see risk added to the share market in a big way and markets will get increasingly volatile. The Fed Reserve reiterated its view that the US economic outlook remains highly uncertain and reiterated that a full economic recovery hinges on the virus being under control. The DOW closed down 0.30% while the broader SP500 was up 0.50% and the Nasdaq also ended up 0.95% for the session. In Europe, major Indexes edged lower in a choppy news driven session but did manage to lift off lows into the close. Traders were supported during the session on vaccine hopes after earlier coming under pressure from a no-deal Brexit and anxieties relating to the EU’s recovery fund. Markets were also supported by better than expected manufacturing data both in Europe and the US.
The USD Index moved lower off recent highs as the continued risk on tone and share market support, weighed on the dollar. The dollar is set to come under further pressure as bets on lower prices increase and longs are unwound. Price action may need to clean out a few more sellers on a move up before turning to attack lows down to 96.50 on the dollar index. The EURUSD was very choppy but did hold up off support around 1.1200 to rally on the dollar weakness and clean out sellers. If the USD is to see further weakness, the EURO will benefit and move up to highs toward 1.1350. The GBPUSD gained on dollar weakness and also as manufacturing data increased the appeal of the Pound. Expect to see the GBPUSD extend up to resistance at 1.2530. The AUDUSD traded like a roller-coaster to whip out both support and resistance on a few occasions. The action made it hard for both bulls and bears to get set in a profitable position. In the end price moved up as the USD fell and US Indexes moved higher. The USDJPY was all one way traffic down at the start of the Asian session and ASX open. The pressure on the USD did not help the pair and expect to see further chop and continuation lower.
SPOT GOLD was hit hard off the highs both on USD moves and as news of a vaccine supported shares and hurt the need for safe havens. Still, Gold remains in an uptrend off 1670 but bulls will need to consolidate above 1765 to bring back buyers for another run higher. Crude Oil was also very choppy along with the USD but did find buying support around 39.00 hold. If the USD continues down expect to see a lift in crude on a break up through 40.00 as long as 39.50 can hold in the near term. Copper had a big clean out of recent buyers through the European session before price rallied hard from the US open. Price is extended so we expect the whippy action to continue as buyers will continually need to be cleaned out prior to a new run higher.
Cryptocurrencies moved up with Ethereum leading the charge holding higher levels. Bitcoin is currently trading at $9234.1 up 0.82% while Ethereum is at $231.02 up 2.10% and Ripple is at $0.17665 up 0.41%.
The ASX200 had a very choppy session to start the new Financial Year with swings of 40 and 50 points. In the end the index ended up 36.5 points to 5934.4 with the Gold sector being the standout performer. The IT sector also ended with solid gains while Energy stocks struggled. Rising stocks outnumbered declining ones by 863 to 377 and 312 ended unchanged. Traders will be waiting to see Trade Balance data at 11:30am and we may see a choppy market ahead of key US employment data out in the US tonight.
The ASX200 is expected to open up 30 points after the SPI200 lifted off support and rallied into the US close.
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ECONOMIC DATA OUT TODAY (AEST)
AUD Trade Balance 11:30am
EUR Spanish Unemployment Change 5pm
EUR Italian Unemployment Rate 6pm
EUR PPI and Unemployment Rate 7pm
USD Unemployment Claims, Non-Farm Employment Change and Unemployment Rate 10:30pm
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SPI200 INTRADAY LEVELS TO WATCH
