US major indices continued to push higher on Friday as reporting continues to come in strong. Many of the banks are beating expectations which have investors more optimistic for earnings across the board. Over the next 3 weeks, we will see most stocks in the US S&P500 and Nasdaq report.
From a seasonal point of view, this is generally a bullish time of year. If the issues that dropped the market in September do not get resolved though we will likely see another dip in November or early December. The US debt issues will become a worry if not resolved as we approach that December deadline. The FED will also report early in November, we expect the FED to start tapering also in Nov.
Daily virus numbers worldwide are still declining. Locally NSW numbers are trending down. Victorian numbers are averaging just below 2,000. Vaccination numbers continue to climb as we are set to reach national targets in November. Nationwide we are at 84.62% first dose and 67.85 second. NSW has hit 92.02% first dose and has now surpassed and has hit the 80% second dose target. Vic is at 88.29% first dose and 66% second dose and is set to hit 70% by the end of this week. There is a lot of positive talk around ending lockdowns and reopening the economy.
Industry metals continue to jump higher, Copper has jumped over 10% in the past 5 sessions nearing all-time highs. The same goes for Nickle and Aluminium. Iron Ore is flirting with the 120 US a barrel level. It pushed back above it last week but is likely to test it again after the Dalian futures fell on Friday. This shows the government spending on infrastructure around the world coming into effect. Keep an eye on the materials stocks for some good buying opportunities down here.
The XJO is expected to edge higher on open this morning – a weak move despite the strong gains seen in from the U.S on Friday. Their futures also sit slightly in the green. Our Monday blues may be the result of an expectation of a breather from the U.S after such a strong move and we don’t want to rally into it. Regardless, it seems markets have shed the weights that have caused it to struggle since the highs in August.
Victoria and NSW – the two most affected states from Covid, are starting to reopen and vaccination rates are strong. For our market to move higher though, and follow the U.S, we will need to get through the key resistance around these levels at 7,400. This is a key level that has played out historically and over the past few weeks. Iron Ore is also showing signs of turning around after a short relief rally – which may damper confidence in some of our key miners. The banks on the other hand are tracking sideward, but often enjoy a short rally leading into some of their reports which are towards the end of October. For our market to rally and enjoy similar gains to the U.S, we will likely need to see strength return to either the Miners and/or the Financials, which combined make up roughly 60% of the XJO.
Today we have Chinese GDP, unemployment, and Industrial Production numbers. Tomorrow, RBA minutes will be released. Aside from that U.S Existing Home Sales are on Friday.
US shares climbed again on Friday, with the major US indices again taking a leg higher. There was little in the way of major economic data for US markets, though we did see a report showing better than expected US retail sales for September. Instead, it was strong company earnings that again powered markets higher; Goldman Sachs and Charles Schwab were the two biggest reports on Friday and each stock rose more than three percent. There is an absence of other major news for US markets at the moment, with the issues of their government debt pushed out to December and their COVID situation slowly starting to improve. Therefore the company earnings season is likely to drive things in the short-term and it has so far been a very strong season. Eight of the eleven sector groups of the SP500 closed higher on Friday, with Financials and Consumer Discretionary the strongest, followed by Industrials. No major sector closed lower to a meaningful degree.