All three major US indices managed finish stronger overnight after a series of strong earnings results from US listed companies. Shares finished around their highs of the day, and the SP500 is now pretty much back to its all-time high from early September. Expectations had been lowered for this US earnings season, but so far just about every major stock has beat expectations and the season is progressing perfectly for equity bulls.
The XJO futures are pointing to a solid rise on open today that should see us open above the resistance at 7,400 points. From a seasonal point of view, this is generally a bullish time of year and the gains are often helped by the US reporting season. If we can break through 7,400, we could start the climb back to our own all-time highs around 7,650. On top of US strength, our market is also being helped by high commodities prices and the end to lockdowns in Sydney and Melbourne.
Daily virus numbers worldwide continue to decline and are now almost half of what they were in early August. Locally we have seen NSW reach their targeted vaccination rates, allowing them to end their lockdown. The lockdown in Victoria is also poised to end this week, with the state expected to reach 70% double-dosed in the next day, allowing the lockdown to end on Friday. The end of these lockdowns should be really good for the ‘reopening stocks’, such as travel, retail, tourism, or hospitality stocks, and will also help the wider economy.
Oil prices continued their climb overnight and the prices of many metals are also very strong at the moment. Iron Ore is the one thing that remains relatively weak compared to prices earlier this year, though its selling seems to have stalled for now. In this environment of high commodities prices, keep an eye on the energy and materials stocks for some good buying opportunities down here.
The XJO is expected to rally on open this morning, following another strong night of buying in the U.S overnight.
Yesterday, we saw a repeat of the previous session where red U.S futures through our session held us back from following their rally. Today, U.S futures sit flat, so our market may have more confidence. In addition, the 7,400 level has proven once again to be a key level of resistance that our market remains reluctant pushing through.
The miners have softened but with Iron Ore stalling from the selling, we could see renewed vigour in our second largest sector – especially with gold and oil continuing their ascent. The Financials continue to stall at their key resistance, trading in an ascending triangle. One would expect a break higher considering that three of the major four are reporting in a week or two, and we often see a strength leading into them.
US shares climbed overnight after another strong round of company earnings reports. J&J and Proctor & Gamble were the biggest reports before market and each exceeded expectations. Netflix reported after market and also delivered a better than expected result. The strong earnings reports have managed to drive US markets back almost to their all-time highs and there is still plenty of the earnings season to go. Economic reporting continues to be mixed, with fewer than expected US housing permits in September, as well as another build-up in US crude inventories. Ten of the eleven sector groups of the S&P 500 closed higher overnight, with only consumer discretionary finishing lower. Healthcare fared the best, followed by Utilities, Energy, Financials, and Technology.