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OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 11/11/20 (as at 8am AEDT)
- SPI200 (Sept) overnight futures up 49 pts to 6390
- SP500 down 8.24 pts to 3542.26
- NASDAQ down 159.93 pts to 11,553.86
- Dow Jones up 262.95 pts to 29,420.92
- FTSE100 up 110.56 pts to 6296.85
- DAX30 up 67.14 pts to 13,163.11
- GOLD futures US session (Dec) up $18.20 to $1872.60 an ounce
- COPPER futures (Comex Dec) down $0.0017 to $3.1543 a pound
- OIL futures US Session (Nymex Dec) up $1.05 to $41.34 a barrel
- CRB Index up 2.30 pts to 153.55
- AUDUSD trading at 0.7279
- EURUSD trading at 1.1808
- GBPUSD trading at 1.3250
- USDJPY trading at 105.2900
- USD Index US Session (ICE Dec) up 0.075 to 92.793
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US indexes were mixed for the session with tech stocks again coming under pressure while the DOW rallied. The broader market SP500 was hampered by the selling pressure into big tech as the rotation into stocks that have been hurt during the pandemic continued. The -stay at home’ trades are taking a hit although it will still be some time until widespread vaccinations become available so do not expect the hard selloff some have feared. The DOW closed up 0.90% while the broader SP500 ended down 0.23% and the Nasdaq closed down 1.37% for the session. In Europe, major Indexes added to the gains with another positive session to end higher. The positive sentiment continued despite the further lockdown fears as bulls were supported by the vaccine breakthrough. Buyers looked past the economic damage caused by lockdowns after data showed that British employers made a record number of staff redundant in the third quarter and the jobless rate jumped.
Bond yields are now in focus and what a rally in yields will mean to borrowing costs and inflation down the track. The rally in yields is pointing to inflation kicking in earlier than the Fed would like, which will in turn ramp up the cost to borrow for companies and slow growth. Maybe the rally was an over reaction to the vaccine news and prices may edge lower in coming days. The headwinds now are for a stimulus package to disappoint and be delayed through the divided congress. Either way, the vaccine has changed the landscape in the near term and traders are still digesting the news.
The USD Index edged higher to consolidate the move up off the 92.200 zone. This would suggest that there is more upside to come and pressure into USD denominated crosses. Traders will be assessing the size and timeframe of further stimulus so shorts may start to unwind if the assessment is not good. We do expect that the vaccine news may have wiped off $1-1.5 Trillion from stimulus so the dollar will need to re-position higher. The EURUSD broke below the 1.1794 level but did end the session back above. If the USD has another run higher tonight then we will see the Euro back below this level and recent buyers charge for the exit. The GBPUSD moved higher through the European session as buyers focused on Brexit and the positive sentiment for a deal. Price is holding higher levels although we do expect that any further upside will be capped if we see a rally into the USD. If the 1.3213 level holds then expect to see another grind higher. The AUDUSD pretty much flat-lined through Asian trade and into the US close. Buyers remained on the sidelines as the initial vaccine risk on euphoria waned. If the 0.7295 level holds then expect to see a squeeze on recent buyers after seeing the 0.7340 highs rejected. The USDJPY retested towards the highs from the previous session to consolidate the gains as traders are expecting more upside for the dollar and a risk on environment. The risk is that stimulus, or the lack of it, becomes a concern and we see a safe haven move back into the YEN to pressure the pair lower.
SPOT GOLD rallied off the lows from the previous sessions beating. This is more due to some bargain hunting from committed gold bulls and sellers closing short positions than a change in trend as the USD was held in a narrow range. If the dollar makes another move higher then expect to see lows tested and potentially broken. Crude Oil pushed up to the 41.50 resistance zone after an early move down. Buyers remain in control as long as price can remain above the 39.50 level. Copper tested the 3.1100 level which held and price reacted higher off the zone. Sellers did step back into the action around 3.1580 to cap the rally. If this level holds, then expect to see a test back down. From there, it will be down to which side is more committed…bulls will need to build a higher low to keep the bullish momentum going.
Cryptocurrencies held onto the gains as traders digested the recent bullish action. Bitcoin is currently trading at $15280.4 down 0.6% while Ethereum is at $449.55 up 0.60% and Ripple is at $0.25499 up 1.95%.
The ASX200 rallied hard on the open yesterday to follow on from a big night in the US session although buyers disappeared and price gave back a lot of the gains into the close. It was a strange day as the index ended the up only 41.7 points to 6340.5 as sectors saw some big moves both up and down. Energy had a great day to end up 8.54% being following by Financials which was up 3.90% while dragging on the bulls was the gold sector which was hammered down 8.33% and IT down 6.16%. Falling stocks outnumbered advancing ones by 723 to 626 and 269 ended unchanged.
The ASX200 is expected to open up 50 points but it will be interesting to see if the index can hold onto the gains today. Will banks gain again today on expectations for a higher interest rate environment.
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ECONOMIC DATA OUT TODAY (AEST)
AUD Westpac Consumer Sentiment 10:30am
NZD Official Cash Rate and RBNZ Rate Statement 12pm
USD Bank Holiday
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SPI200 INTRADAY LEVELS TO WATCH
