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OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 29/10/20 (as at 8:00am AEDT)
- SPI200 (Sept) overnight futures down 103 pts to 5942
- SP500 down 119.65 pts to 3271.03
- NASDAQ down 426.48 pts to 11,004.87
- Dow Jones down 943.24 pts to 26,519.95
- FTSE100 down 146.19 pts to 5582.80
- DAX30 down 503.06 pts to 11,560.51
- GOLD futures US session (Dec) down $35.20 to $1876.70 an ounce
- COPPER futures (Comex Dec) down $0.0262 to $3.0673 a pound
- OIL futures US Session (Nymex Dec) down $2.22 to $37.35 a barrel
- CRB Index down 4.04 pts to 146.66
- AUDUSD trading at 0.7045
- EURUSD trading at 1.1746
- GBPUSD trading at 1.2985
- USDJPY trading at 104.3200
- USD Index US Session (ICE Dec) up 0.553 to 93.480
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US indexes were hit hard as traders unwound positions and raced to lock in longer term gains as virus numbers spike. With many already being concerned for the global recovery, the new lockdowns across Europe and other regions weighed on sentiment. Risk assets were hit while safe havens such as the USD and bonds benefited. Elections are still playing a major part on sentiment as many expect that a Biden win will be good for the economy. A clean sweep by the democrats is expected to lead to a de-escalation of trade tensions with traditional allies such as Europe and Canada, as well as China. It is also expected to lead to a larger stimulus package to support struggling parts of the economy and help support the unemployed. The DOW closed down 3.43% while the broader SP500 ended down 3.53% and the Nasdaq closed down 3.73% for the session. In Europe, major Indexes were also hit hard on virus concerns as Germany goes into emergency lockdown along with France, to combat surging COVID-19 cases. Other major markets followed the DAX lead and went into risk off mode on expectations that there will be more restrictions and lockdowns to come in the region which will in turn stunt the economic recovery which is already on shaky ground.
The USD Index finally broke up through the 93.00 zone on the safe haven bid as share markets went into selloff mode. Price pushed up through recent highs at 93.50 but has since fallen back below the level. Although we do expect a short squeeze as long term holders lock in gains, there is opportunity for further downside after elections as a Biden win is expected to weigh on the Dollar through stimulus. It will depend on whether the Democrats can control both chambers of Congress but either way, more stimulus will be needed but this outcome should bring forward the timeline with the lack of ‘haggling’ and ‘politics’ being played between the parties. The EURUSD went into selloff mode as the dollar rallied. Price is holding lower levels and will continue to do so if the safe haven bid into the dollar picks up steam. The next support will come in around the 1.1690 area if the lower high at 1.1785 holds. The GBPUSD also came under pressure but did react off the 1.2915 area which was a previous higher low. The Pound has the benefit of support from positive Brexit talks which may offset, to some extent, the dollar rally. A move back down through 1.2972 may see a retest of the overnight lows at 1.2916. The AUDUSD took a nosedive into the open of the European session but not before resistance at 0.7146 was flushed and buy stops were triggered. The selloff took price back down to a major support zone where we expect to see a reaction from buyers. If the level does breaks, then there is a lot of downside to come. The USDJPY continued the move down but did find buying support around the 104.150 level which is a long term bid zone. A break of this level will trigger a wave of negative sentiment into the currency pair.
SPOT GOLD bulls ran for cover overnight with the safe haven bid into the USD. Prices fell hard off the 1908 zone once the European market opened and sold off on lockdown news. Price may find some buyers down at the 1870 zone although it will depend on the USD and it will take a brave trader to catch the falling knife. Crude Oil was hit hard on concern for falling demand due to further lockdowns. An increase in US oil production led to an unexpected build in US inventories which many expect to see a supply glut build now and weigh on the action. Copper tried to find buyers to limit the downside move. The action was linked to the movement up into the USD but buyers did step in as price spiked lower into 3.0400 support. This shows that bulls remain focused to the upside and may see this pullback as another buying opportunity especially if expectations are for Biden to win which would weigh on the Dollar.
Cryptocurrencies moved lower in a risk off tone and as the USD found some safe haven buying. Bitcoin is currently trading at $13159.5 down 3.81% while Ethereum is at $384.56 down 5.56% and Ripple is at $0.24481 down 2.70%.
The ASX200 opened weaker yesterday but bulls were quick to go bargain hunting and lift the index into the close. In the end the index only ended up 6.7 points to 6057.7 as the IT and Gold sectors bounced back strong while Energy and Financials were the only drags on the action. Rising stocks outnumbered declining ones by 660 to 587 and 336 ended unchanged.
The ASX200 is expected to open down 100 points as the SPI200 fell apart along with the European and US markets.
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ECONOMIC DATA OUT TODAY (AEST)
JPY Retail Sales 10:50am
AUD Import Prices 1:30am
JPY BOY Outlook and Monetary Policy Statement Tentative
JPY BOJ Press Conference Tentative
EUR German Unemployment Change 7:55pm
USD GDP Data and Unemployment Claims 11:30pm
EUR Main Refinancing Rate and Monetary Policy Statement 11:45pm
EUR ECB Press Conference 12:30am
USD Pending Home Sales 1am
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SPI200 INTRADAY LEVELS TO WATCH
