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OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 10/11/20 (as at 8am AEDT)
- SPI200 (Sept) overnight futures up 130 pts to 6434
- SP500 up 41.22 pts to 3550.66
- NASDAQ down 181.45 pts to 11,713.78
- Dow Jones up 834.57 pts to 29,157.97
- FTSE100 up 276.27 pts to 6186.29
- DAX30 up 615.95 pts to 13,095.97
- GOLD futures US session (Dec) down $87.30 to $1864.40 an ounce
- COPPER futures (Comex Dec) down $0.0147 to $3.1395 a pound
- OIL futures US Session (Nymex Dec) up $2.90 to $40.04 a barrel
- CRB Index up 3.55 pts to 151.25
- AUDUSD trading at 0.7278
- EURUSD trading at 1.1811
- GBPUSD trading at 1.3158
- USDJPY trading at 105.3800
- USD Index US Session (ICE Dec) up 0.603 to 92.830
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US indexes were supported by positive vaccine news as the DOW and SP500 powered into new all time highs while the NASDAQ found selling pressure as big tech lagged. Positive data from a late-stage COVID-19 vaccine trial prompted traders to go all in on risk while tech stocks saw some unwinding on expectations that they will no longer benefit from a ‘stay at home’ trade. Sectors; such as energy, travel and financials; that were hardest hit from the pandemic were the big winners. US drugmaker Pfizer and its German partner BioNTech said a large-scale trial of their vaccine showed it was more than 90% effective in preventing COVID-19 and found no serious safety concerns so far. The news has removed the worst case scenario of further lockdowns and triggered traders to look ahead to a economic recovery as we get back to a pre-covid world. On a strangely morbid side note…gun stocks tumble after the upbeat vaccine news…seems that there is no more need to shoot anyone. The DOW closed up 2.95% while the broader SP500 ended up 1.17% and the Nasdaq closed down 1.53% for the session. In Europe, major Indexes also rocketed higher on the vaccine news and hopes that we can all finally get back to some normality. A rally was also supported by positive sentiment towards Brexit and as a Biden victory is expected to benefit ties between Europe and the US that was hurt under Trumps presidency. The EU will impose tariffs on the US up to $4 billion of imports in retaliation for US subsidies on Boeing although this may be short lived when Biden takes office.
The reflation trade was on overnight as US and European bond yields rallied hard. Longer term this does shine the light on inflation and higher interest rates although there is a lot of good news around into the end of the year to put this on the back burner for now.
The USD Index moved up off session lows once the US session got underway and vaccine and return to work hopes potentially diminished the need for another massive stimulus package. The Dollar was trading below the 92.000 level before spiking up to the 93.000 zone as US indexes pushed to record highs. We expect that there will be a further unwind into the dollar to pressure USD denominated assets. The EURUSD was hit by the run up into the Dollar as buyers locked in some gains. A break down below 1.1792 may see a bigger unwind and move down to 1.1620 lows. The GBPUSD was more choppy than the Euro and managed to stand its ground under the pressure from the USD rally. Support came from the positive mood towards a Brexit deal as both sides seem to be playing ball and intent on a deal. The AUDUSD initially benefited from the stock market rally in the European session before coming under pressure from the dollar rally in the US session. Expect that the risk on sentiment will support the AUD but it will depend on whether there is a bigger short squeeze and unwind into the USD. The USDJPY took off and rallied hard as the safe haven YEN took a hit on the back of the positive vaccine news that beat analysts expectations. Of course price is extended but there is the possibility that there will be an extension move higher if the sentiment continues.
SPOT GOLD was hit hard as price fell through the floor and took out minor support levels. Aussie gold was also hit hard but traded through a key support level at 2617 so expect to see some serious pressure today into local gold stocks on the open. Spot gold will need to hold the 1858 area to prevent a bigger move south. Crude Oil ended up over 8% as the vaccine news triggered buyers into action on expectations for a global lift in demand. If the bulls continue the momentum, a move up through 41.60 will bring in more buyers for a run into new highs through 43.65. Copper initially rallied before reacting lower off recent highs around 3.2080. It seems that the bullish sentiment was already factored into price and buyers were happy to lock in some gains on expectations for further USD pressure. If price starts to find support above 3.1100, then expect a run on the highs and a potential break…again this will depend on the USD movement.
Cryptocurrencies had a strange session as they wanted to go higher along with the share markets risk on mood although were weighed down by the rally into the USD. Bitcoin is currently trading at $15392.6 up 0.30% while Ethereum is at $445.95 down 1.38% and Ripple is at $0.25052 down 1.43%.
The ASX200 rallied straight up from the open yesterday and held the gains into the close as bulls come out to play. The index smashed through the 6200 level to close up 108.6 points to 6298.8. It was again a sea of green with the Metals and Mining, Telecom Services and Materials sectors leading the way while Financials stocks were the main laggers for the day. Rising stocks outnumbered declining ones by 923 to 377 and 308 ended unchanged.
The ASX200 is expected to open up 135 points as the SPI200 took off like a rocket as overnight markets rallied hard.
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ECONOMIC DATA OUT TODAY (AEST)
JPY Current Account 10:50am
AUD NAB Business Confidence 11:30am
CNY CPI and PPI Data 12:30am
GBP Claimant Count Change and Unemployment Rate 6pm
EUR German ZEW Economic Sentiment 9pm
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SPI200 INTRADAY LEVELS TO WATCH
