The FED announcement last week has the US dollar weakening, sending the AUD soaring. Many are now talking the AUD back to $80 US. For the Miners, the strong Aussie will offset a lot of the extra profits made from rising commodities prices. Other exporters and companies that make a lot of their sales in USD will also see a hit to their bottom line the more the currency moves. We often see our market disconnect or even pull back a little when the Aussie dollar goes up.
Otherwise, US markets were mixed with the NASDAQ up again after Apple and Tesla completed a stock split. The SP500 and Dow were both lower. Energy, Materials, Industrials, and Financials led the move down in the US.
The Dow index went through some changes removing oil giant ExxonMobil, pharmaceutical company Pfizer, and the aerospace and defense manufacturer Raytheon Technologies. To be replaced by Salesforce, a cloud computing company; Amgen, a biotechnology firm; and Honeywell International, an aerospace and industrial manufacturer.
Locally, reporting is pretty much finished, we saw a very mixed reporting season. At this stage, the majority are missing expectations in the face of COVID-19 related issues. Out of 168 companies that have reported, 45.81% have beat expectations and 32.14% have seen EPS growth.
Yesterday the Victorian Premier Daniel Andrews announced we will release a plan for Vic on Sunday. This plan will be a framework of how we will come out of stage 4 lockdowns. The negative to this is that he also hinted we will likely be in stage 4 for longer than the 6 weeks.
With negative leads from the U.S last night and their futures this morning our market is set to open near the 6000 level. This is a major level for our market that has seen lots of price action historically and recently and so should act as a support against strong falls today.
Arguably the main reason our market is struggling at the moment is our dollar rallying against the U.S and putting pressure on some of our major stock. It is speculated by many market commentators that the AUD is likely to continue to rally against a depreciating U.S dollar which spells further issues for our miners and other major contributors like CSL and MQG.
The miners have been doing most of the heavy lifting since our falls in March, with the banks fairly subdued. If the miners struggle, we will need other sectors, and more likely the financials to come to the party to keep our market elevated but this looks murky at best.
From a technical perspective our market continues to trade in an ascending triangle, so we continue to assume sideward movement in the shorter term and bullish movement in the more medium to longer term.
US shares pulled back overnight after several days of consecutive all-time highs for the S&P 500 index. The NASDAQ did manage to squeeze out another record however, with a rise led by strong gains in Apple and Tesla after the tech giants conducted a stock split.
US shares are still trading in blue sky territory and are perhaps taking a breather. Oil & Gas, Basic Materials, and Financials stocks were the weakest sectors in the US overnight, while Healthcare, Tech, and Utilities recorded minor gains.