US markets managed to find some buying with all sectors in the green apart from Utilities. Energy was the stand out with Crude hitting back near the $72 US a barrel mark. All in all market sentiment is very mixed. We are seeing the divide in sentiment grow with many analysts from the large banks in the US warn of a market crash. But on the flip side, there is still also many analysts out there predicting that the market has plenty more upsides left. September is seasonally a negative month, and with the SP500 now testing the uptrend line and key support levels we have likely seen the worst of it.
There is still a lot going on this month that could cause continued volatility. Early next week is the FED meeting where we expect them to announce a plan to start tapering their bond-buying. Many do not expect a taper tantrum this time around, but it will depend on the message. The market will want a clear and slow timeline in winding the bond purchases. Fed Chair Powell will also need to stay on message that interest rates will not go up when the bond-buying ends.
Bidens $3.5 trillion spending and new tax measures could also see some volatility in the market. This and debt ceiling issues will all arise in the next few weeks. With all this playing out it is likely to see the market continue to whip around.
Friday is triple witching, which is where stock options, stock index futures, and stock index options all fall on the same day. often, we see a few volatile days around this. So don’t be surprised if you see some strange movement in the market tomorrow.
Virus numbers could be finding a turning point in NSW, as the narrative remains centred around getting vaccinated and reopening. New South Wales hit 80 percent of adults with at least one dose of a COVID-19 vaccine, and Victoria should reach 70 percent first-dosed in the coming days. These rapid levels of vaccinated individuals should allow for the reopening plans to play out, with an end to lockdowns expected to start around late October. With this there is still plenty of light at the end of the tunnel, the issue is that much of this could already be priced into our market.
The XJO is expected to open higher this morning, following both a strong night in the U.S and their positive futures this morning.
Yesterday we clearly bounced off the key support at 7,400 led by green US futures during our session. Today we are likely to continue those gains, though will face resistance around 7,450 to 7,500. We are unlikely to make much headway beyond that today without further gains in U.S futures during our session.
Markets have shaken of the recent jitters and sentiment seems to be shifting back towards bullishness. Markets will likely remain cautious though going into the Fed meeting on the 22nd. Markets’ reaction to inflation data has been volatile lately as numbers continue to disappoint.
US shares closed higher overnight, with positive economic data helping to reverse some of the recent selling. It was the biggest daily gain for US shares this month after a relatively soft start to August. US economic data showed strong export prices, while import prices fell. We also saw Industrial Production for August come in-line with expectations, while a measure of business conditions in New York came in better than expected. There was also a substantial draw-down in US oil inventories. Unsurprisingly, the strongest sector overnight was the Energy space, which jumped nearly 4 percent on average. Industrials, Materials, and Financials also rose strongly. Utilities were the only stocks to close lower on average.