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OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 7/10/20 (as at 7:50am AEDT)
- SPI200 (Sept) overnight futures down 17 pts to 5932
- SP500 down 47.66 pts to 3360.97
- NASDAQ down 177.88 pts to 11,154.61
- Dow Jones down 375.88 pts to 27,772.76
- FTSE100 up 7.00 pts to 5949.94
- DAX30 up 77.71 pts to 12,906.02
- GOLD futures US session (Oct) down $22.50 to $1890.00 an ounce
- COPPER futures (Comex Dec) down $0.0348 to $2.9282 a pound
- OIL futures US Session (Nymex Nov) up $0.68 to $39.90 a barrel
- CRB Index up 2.13 pts to 149.51
- AUDUSD trading at 0.7101
- EURUSD trading at 1.1732
- GBPUSD trading at 1.2873
- USDJPY trading at 105.6400
- USD Index US Session (ICE Dec) up 0.350 to 93.895
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US indexes were hit hard late in the session as bears returned to the market in force on stimulus news. In a surprise announcement by Trump, he tweeted “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business”….seems like a hint of blackmail to vote team Trump! This comes after markets have rallied on recent news that progress was being made. There were a few trapped buyers that ran for the doors as the volatility spiked. This comes after Powell earlier warned that the recovery will stall on a failure to provide further relief to businesses and households. The news triggered a move back into safe haven assets and out of riskier trades as investors have to now re-assess the changing landscape. The DOW closed down 1.34% while the broader SP500 ended down 1.40% and the Nasdaq closed down 1.57% for the session. In Europe, major Indexes ended the session with gains although they will be playing catchup with the stimulus news on the open tonight. The DAX and FTSE already are struggling to push up out of recent ranges so the news may trigger a strong selloff.
The USD Index rallied hard on the back of the news of the pause in stimulus negotiations. Price is now heading back up to the 94.00 zone on safe haven buying and will squeeze out sellers if there is no new ‘tweets’ to support the share markets. Traders will be assessing the news and trying to work out what that means to the economy up to the elections. The EURUSD took a nosedive once the news hit and the USD rallied. Price found some support and bounced around the 1.1736 zone which, if it breaks, will trigger a wave of selling into the pair. Key again is the USD and if Trump is true to his word, expect the dollar to rally to reset at higher levels. The GBPUSD was already heading lower off resistance around 1.2990 and extended the move on the dollar strength. Brexit negotiations may save the Pound from further weakness if the dollar rallies. The AUDUSD found weakness to continue a selloff that started in the Aussie session after the RBA statement on interest rates. Price could start to fall further as buyers get squeezed out of the action through 0.7100. The USDJPY spiked lower on the dollar strength although the move was short lived as YEN safe haven buyers jumped into the action to support price. Expect to see a move up if the Index weakness continues to gather steam and YEN buyers get more active.
SPOT GOLD was hit hard as the dollar moved up leaving bulls running for the door. Price extended down through support at 1890 but is stretched so may see a relief rally on bargain hunting. We do not expect to see extended strength into the action if the dollar continues to rally and will be watching for a lower high. Crude Oil was looking good until markets took a hit and price gave back a lot of the gains. Price managed to earlier kick higher on expectations that the continued recovery will lift demand but now traders will have to re-assess as stimulus is off the cards in the near term. Expect to see a re-tracement into US inventories which will come out in the US session tonight. Copper was in a range bound mood until the Trump tweet hit the market to trigger sellers into action. Expect to see further pressure from the rally into the USD and expectations that the lack of stimulus will hurt the global recovery.
Cryptocurrencies took a late hit along with share markets to move into negative territory for the session. Bitcoin is currently trading at $10574.0 down 1.50% while Ethereum is at $340.57 down 3.20% and Ripple is at $0.24500 down 1.92%.
The ASX200 could not follow on from the overnight strength in the US as the index floundered yesterday from the open ahead of the interest rate announcement where the RBA kept rates on hold. At the close the index managed to grind out some gains to end up 20.5 points to 5962.1 on hopes that we may see interest rates cut by November to help stimulate the economy along with further stimulus hopes in the US. Rising stocks outnumbered declining ones by 729 to 456 and 375 ended unchanged.
The ASX200 is expected to open down 15 points but expect some volatility on the open after stimulus news.
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ECONOMIC DATA OUT TODAY (AEST)
CNY Bank Holiday
EUR German Industrial Production 5pm
EUR ECB President Lagarde Speaks 11:10pm
USD Crude Oil Inventories 1:30am
USD FOMC Meeting Minutes 5am
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SPI200 INTRADAY LEVELS TO WATCH
