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OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 4/11/20 (as at 8am AEDT)
- SPI200 (Sept) overnight futures up 4 pts to 6056
- SP500 up 58.92 pts to 3369.16
- NASDAQ up 202.96 pts to 11,160.57
- Dow Jones up 554.98 pts to 27,480.03
- FTSE100 up 131.80 pts to 5786.77
- DAX30 up 300.70 pts to 12,088.98
- GOLD futures US session (Dec) up $16.60 to $1909.10 an ounce
- COPPER futures (Comex Dec) up $0.0210 to $3.0980 a pound
- OIL futures US Session (Nymex Dec) up $1.04 to $37.85 a barrel
- CRB Index up 1.12 pts to 147.02
- AUDUSD trading at 0.7165
- EURUSD trading at 1.1718
- GBPUSD trading at 1.3058
- USDJPY trading at 104.5400
- USD Index US Session (ICE Dec) down 0.727 to 93.418
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US indexes followed on from Asian and European strength to rally from the open on expectations for a clear victory for Biden. Markets are or have priced in a clean win for Biden and a ‘blue wave’ scenario in the senate with expectations for a swift major stimulus package. The risk now, as the elections continue to unfold, is a shock Trump win, a contested result, or just a divided outcome. With the rally in global markets, this will trigger a major risk off event as even a divided government will mean problems for stimulus and potentially a major scaling back of expectations. If Biden is victorious then the pain may come later as markets factor in the ‘free money’ support and then look towards corporate tax hikes, more regulation and virus problems. The DOW closed up 2.06% while the broader SP500 ended up 1.78% and the Nasdaq closed up 1.85% for the session. In Europe, major Indexes also rallied hard from the open as traders focused on an easy road to big stimulus and better trade ties with the US on a Biden victory. Banks and auto stocks led the charge higher in the risk on environment.
The markets seem to be rather bullish considering the move to further lockdowns in Europe and the economic headwinds. It may be my bearish mindset around the elections but markets seem primed for a fall at any sign of non-clean sweep for Biden. Traders are relying on polls into the count which in the past have proven to be an un-reliant gauge.
The USD Index came under pressure as traders factored in a Biden win and a major stimulus package in the near term to weaken the dollar. Price easily pushed below the 94.00 zone as sellers repositioned themselves for the easy money. There is still a potential risk to the upside on a contested result but for now sellers are in control and looking to the 93.000 level. The EURUSD pushed up off support at 1.1610 as buyers stepped up the pressure on the USD rally. If we see pullbacks supported today then expect to see a push up to and potentially through the 1.1760 resistance zone. The GBPUSD pushed up off support as the USD fell. Like the Euro, if buyers support pullbacks, then it will mean further USD weakness and a continued move up in the pound as buyers jump in to the action. The AUDUSD launched higher after an initial push lower on the RBA rate cuts which were already factored in to price. Buyers were supported by the rally in shares and expected weakness into the dollar. If the dollar continues on its path lower then expect the commodity currency to continue to benefit. The USDJPY was well contained around the 104.950/105.000 zone as expected thanks to the pressure into the USD. Still, the action lower was controlled as some safe haven buyers also moved out of the YEN. If lower highs can hold then expect a move down to test 104.200.
SPOT GOLD focus remains on the USD as buyers benefited from the fall into the dollar. Price has now pushed back up to the 1910 zone where we may see a reaction from sellers and some gains locked away…of course this will depend on the USD movements over the day. Crude Oil continued the squeeze on sellers and moved up through the 38.00 level before seeing some profit taking from buyers into the US close. Watching to see if higher lows can continue to hold on the bullish sentiment…this will depend on the what follows in elections. Copper moved up during the session on the general bullish mood and risk on sentiment into markets. Like Crude Oil, price did see some profit taking into the close.
Cryptocurrencies were well contained for the session and did not get any flow through bullish sentiment from the risk on mood of the major share markets. Bitcoin is currently trading at $13741.3 up 1.35% while Ethereum is at $382.91 down 0.89% and Ripple is at $0.23885 up 1.24%.
The ASX200 had a big session yesterday being helped by the RBA rate cut and expansion to QE for Australia. At the close the index gave up 20 points but still ended up 115.1 points to 6066.4. It was a sea of green as the Oil sector ended up 5.32%, then Resources were up 2.77% and then Gold ended up 2.60%. Rising stocks outnumbered declining ones by 866 to 380 and 322 ended unchanged.
The ASX200 is expected to open flat to up 5 points as the SPI200 held resistance and highs from the days bullish action.
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ECONOMIC DATA OUT TODAY (AEST)
USD Presidential Elections
NZD Employment Change and Unemployment Rate 8:45am
AUD Retail Sales 11:30am
CNY Caixin Services PMI 12:45pm
USD ADP Non-Farm Employment Change 12:15am
CAD Trade Balance 12:30am
USD Trade Balance 12:30am
USD ISM Services PMI 2am
USD Crude Oil Inventories 2:30am
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SPI200 INTRADAY LEVELS TO WATCH
