Overnight the US markets continued to climb, but with less enthusiasm than the night before. Markets needed to take a pause here with such a strong rise this week. News from Pfizer confirmed what most were expecting and that is 3 does are effective against Omicron. Furthermore, Pfizer and BioNTech can also produce a more targeted vaccine for Omicron by the end of the 1st quarter next year.
Next up is the CPI reading Friday night and the FED next week. The recent comments from the FED have investors speculating that they could double the rate at which they are tapering bonds and increase rates next year. This is a moving target, Reducing the pandemic aid from the FED is positive, but only on the back of strong economic data. We could still be in for a bumpy road towards a Christmas rally, with the CPI, FED and Debt ceiling issues which we need to get through over the next week.
Covid numbers worldwide continue to climb each week and still seem to be gaining momentum. In saying that though the daily deaths have not increased as much, compared to the last wave. This shows that the vaccines are doing their job of reducing the mortality rate. The feeling out there right now is that the new variant is unlikely to cause further lockdowns. But we are still waiting for more research. The light at the end of the tunnel is that the mRNA vaccines like Moderna and Pfizer can be adapted to the new variant quickly and a booster could be available early next year.
The XJO is expected to move lower on open this morning despite a meek rise in the U.S last night. Their flat futures this morning don’t inspire confidence, but if we see them turn into the green our market will likely hold gains.
Yesterday we made a good effort to get through 7,400 but by close we had given up roughly a quarter of the intraday rally to finish on it. This is also roughly where the 100 day MA comes in. The U.S’s small rally last night hints that the recent Bull Run is about to run out of steam in the short term, and as the media refocuses its dramatic lens on the new Omicron strain, we may even see a small pullback before moving higher. The U.S stalled at their all-time high resistance level last night, and don’t be surprised if our market needs to see them through it before we push through 7,400 in any meaningful measure.
Although the past few days have seen a rally in the AUD, it remains relatively low and coupled with a recently strong Iron Ore price, we should see our miners remained buoyed. If they do experience some profit taking, 15,800 is the first support.
US shares closed higher again overnight. With technology shares again powering US markets higher. US lawmakers are progressing with plans to raise the US government debt ceiling and this now looks achievable in the near-term. US shares were also boosted by a jump in job openings, which rose to a higher level than expected, suggesting that the US economy is remaining strong. However, US oil inventory reads are starting to show build-ups. Tonight we will see US jobless claims, which will be followed US CPI/inflation data on Friday night. This inflation data will be very important for US markets moving forwards, so look for volatility around this event. Eight of the eleven sector groups of the SP500 closed higher overnight, with Communications and Healthcare stocks faring the best. Financials were the worst performing sector and most sectors were relatively flat.
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- Panic sets in, as the FED meeting approaches - January 24, 2022