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OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 4/08/20 (as at 7:15am AEST)
- SPI200 (Sept) overnight futures up 84 pts to 5972
- SP500 up 23.49 pts to 3294.61
- NASDAQ up 157.52 pts to 10,902.80
- Dow Jones up 236.08 pts to 26,664.40
- FTSE100 up 135.09 pts to 6032.85
- DAX30 up 333.62 pts to 12,646.98
- GOLD futures US session (Aug) up $8.20 to $1971.00 an ounce
- COPPER futures (Comex Sep) up $0.0470 to $2.9150 a pound
- OIL futures US Session (Nymex Sep) up $0.40 to $40.77 a barrel
- CRB Index up 3.08 pts to 146.77
- AUDUSD trading at 0.7122
- EURUSD trading at 1.1759
- GBPUSD trading at 1.3066
- USDJPY trading at 106.0000
- USD Index US Session (ICE Sept) up 0.172 to 93.493
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US indexes were again lifted by tech stocks as the NASDAQ pushed to new all time highs. Buyers were also supported by better than expected manufacturing data both in Europe and the US. Its seems to be a general sense of ‘go with the flow’ and stay with what works as tech shares continue to shine and trigger risk on into the overall market. The question is now ‘how much is and will be factored into the market’ as fundamentals continue to diverge from prices. Traders do not have any fear that rates will go up as real rates move below -1% for the first time. This coupled with stimulus means ‘cheap money’ that will flow into the markets. The US government continue to argue over the terms of a new stimulus package as Republicans appear reluctant to spend more. If there is no stimulus, then the rug gets pulled from the economy as consumers and businesses still need support. Talk of a lockdown in the US was brushed aside by Trump saying that they are not a viable path in combating the virus and do not prevent future infections…using Australia as an example. The DOW closed up 0.89% while the broader SP500 was up 0.72% and the Nasdaq ended up 1.47% for the session. In Europe, major Indexes bounced back from previous weakness being supported by manufacturing data. Bulls were also out in force on hopes that the US will come to an agreement soon on stimulus.
UK and US bond yields diverge from European and Japan yields. The yields on US and UK bonds have slowly been eroding a lot faster than in Europe and Japan which suggests domestic economic conditions are playing a major roll. The difference is attributed to the success in dealing with the spread of the virus which will lead to a quicker recovery.
The USD Index saw another minor bout of profit taking on crowded short positions to rally although the index gave up a lot of the gains once the US opened for trade. Any gains are expected to be capped for now as the US bond market suggests interest rates will be low for many years to come. The EURUSD moved lower as buyers locked in gains although price action did bounce along with the dollar move lower. We will be watching now to see if there may be further weakness into the Euro and price push below the 1.1695 zone. The GBPUSD also fought back from some initial weakness on the dollar swings. Price action is at a crossroads and may see some further profit taking if it can not hold current levels below 1.3108. The AUDUSD also followed similar action with initial weakness giving way to a rally into the US close. The bulls were supported by a continued risk on tone into shares and expectations that the USD rally may be capped. Watching to see if support around 0.7065 can hold and provide another buy opportunity. The USDJPY saw the move up off lows run out of steam. If price can hold below the 106.405 zone then we expect to see sellers edge back into the action.
SPOT GOLD weathered the USD move to hover around highs as the bulls remain committed. The price action is looking heavy and we would expect to see a clean out of late buyers before the potential continuation of the trend up. Crude Oil spiked up through the 40.50 resistance area as concerns for increasing supply was brushed aside thanks to the lift in global manufacturing data. Still, there is potential for a move lower and for another lower high to hold around 41.20. Copper bulls fought back from the previous sessions weakness to move back up to the 2.9400 area. Price remains intent on staying in a range around the highs for now.
Cryptocurrencies moved up as the risk on sentiment in share markets flowed over to cryptoland. Bitcoin is currently trading at $11360.8 up 2.36% while Ethereum is at $390.73 up 3.37% and Ripple is at $0.31362 up 9.58%.
The ASX200 managed to bounce back from a weak open yesterday before flat-lining into the close ahead of RBA interest rates today. The index finished the session down 1.7 points to 5926.1. Buyers found support from Chinas better than expected manufacturing data. The Gold sector was the strongest followed by Metals and Mining while the Financials weighed heavily on the action. Falling stocks outnumbered advancing ones by 731 to 510 and 326 ended unchanged.
The ASX200 is expected to open up 80 points after a bounce in Europe started the move up in the Aussie market which was supported by the US.
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ECONOMIC DATA OUT TODAY (AEST)
AUD Trade Balance and Retails Sales 11:30am
AUD Cash Rate and Rate Statement 2:30pm
EUR PPI Data 7pm
USD Factory Orders 12am
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SPI200 INTRADAY LEVELS TO WATCH
