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OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 5/11/20 (as at 8am AEDT)
- SPI200 (Sept) overnight futures up 6 pts to 6060
- SP500 up 81.88 pts to 3451.04
- NASDAQ up 430.21 pts to 11,590.78
- Dow Jones up 367.63 pts to 27,847.66
- FTSE100 up 96.49 pts to 5883.26
- DAX30 up 235.24 pts to 12,324.22
- GOLD futures US session (Dec) down $4.70 to $1905.70 an ounce
- COPPER futures (Comex Dec) up $0.0135 to $3.1060 a pound
- OIL futures US Session (Nymex Dec) up $1.28 to $38.94 a barrel
- CRB Index up 1.88 pts to 148.90
- AUDUSD trading at 0.7176
- EURUSD trading at 1.1717
- GBPUSD trading at 1.2975
- USDJPY trading at 104.5400
- USD Index US Session (ICE Dec) down 0.077 to 93.483
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US indexes charged higher right from the open and managed to hold the bulk of the gains into the close. It seems that wall street was happy with the likely outcome for the senate as it will mean a minimal chance of higher antitrust scrutiny and capital gains taxes and reduced chances of major policy changes. The election result is still up in the air for now and remains close as votes continued to be counted but it seems that there will not be a clean sweep for the Democrats as polls initially suggested so even if Biden can win, not much within senate will change. What this may mean to stimulus seems still unclear and if the decision for a final result ends up in court, we could expect that it will not be coming anytime soon. The rally is on the back of expectations that the election will be wrapped up in a few days, but potential court cases will put a dent in the current market optimism. The DOW closed up 1.34% while the broader SP500 ended up 2.43% and the Nasdaq closed up 3.85% for the session. In Europe, major Indexes started the session on the back foot but soon reversed the losses to move higher. It seems that traders still hold out hope for a Biden win which would be better for US and European trade ties although the strength of the rally seemed more of ‘follow the trend’ than anything else as the outcome is still very much uncertain. Also, a bigger fiscal package for a struggling US under virus pressures, seems more uncertain on the likely US senate outcome.
Even though the stock markets rallied hard, there was still a rally into US bonds. US bond yields fell as buyers jumped into the safety of bonds. There may be concern that a stimulus package may fail to meet the markets expectations and we may see a risk off move into share markets.
The USD Index rallied early as traders unwound bets on a Democratic clean sweep and a extensive stimulus package. Price did come back down to initial levels as share markets rallied and stock market risk appetite remained strong capping any safe haven move into the dollar. We see stimulus as more uncertain now which would be supportive of the dollar down around the 93.000 level and see a potential for a larger short squeeze on the dollar. The EURUSD swung in a 150 point range but eventually ended where it started around the 1.1725 zone. Do not expect too much movement in the Euro until there is a clearer picture for the USD which will depend on elections and senate results. The GBPUSD also saw a large range with uncertainty into the close as price held lower highs and higher lows. A push up through 1.3010 may see a run at the highs but on the flip side, a push below 1.2970 will see a retest of support….either way price is set to move out of the current contractive action. The AUDUSD rallied on the back of the risk on sentiment into shares. Price held the highs around 0.7200 but looks set for a pullback to take some heat out of the action. Expect to see another run higher after a pullback if shares continue the bullish move up today. The USDJPY hit lower after the dollar gave up the gains. Price pushed down into support around 104.200 and looks set for a retest if 104.650 holds. If not, expect a slow grind higher as the USD moves up off support.
SPOT GOLD was choppy on the swings into the USD. Bears held a test of resistance at 1910 twice but also saw higher lows hold into the zone showing the dependence on the USD for direction. If the USD remains range bound in coming days, then we expect that gold will do the same and remain below 1910 and above the 1885 area. Crude Oil pushed aside the dollar chop and edged higher on the back of the risk on sentiment into the share market. We do not expect any rally to get out of hand as virus cases remain on the rise and point to further restrictions to pressure oil demand. Copper saw some range bound action as price tested both support and resistance levels before settling on highs for the session. If support continues to hold expect bulls to make a charge up to highs as long as sentiment remains positive into the share market.
Cryptocurrencies gained back some lost ground as share markets held the gains into the close. Bitcoin continues to look strong and is currently up 2.28% at $14047.4. Ethereum had a good session and is at $402.08 up 4.85% while Ripple is at $0.23756 down 0.16%.
The ASX200 had a choppy session yesterday as the election fun began. Price fell hard from the open only to reverse and trade to new highs before settling around yesterdays close. In the end the index was down only 4.3 points to 3062.1 with the IT sector being the best gainer and Metals and Mining being the biggest loser. Rising stocks outnumbered declining ones by 736 to 456 and 355 ended unchanged.
The ASX200 is expected to open up 10 points after the SPI200 gave up some of the earlier gains into the US close.
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ECONOMIC DATA OUT TODAY (AEST)
AUD Trade Balance 11:30am
EUR German Factory Orders 6pm
EUR EU Economic Forecasts Tentative
EUR Retail Sales 9pm
GBP Official Bank Rate and BOE Monetary Policy Summary 11pm
GBP Asset Purchase Facility 11pm
USD Unemployment Claims 12:30pm
EUR German Buba President Weidmann Speaks 1am
USD FOMC Statement and Fed Funds Rate 6am
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SPI200 INTRADAY LEVELS TO WATCH
