US markets continued their advance, with a third consecutive day of gains on Friday. Markets are hooked on stimulus at the moment, but a much touted fourth US fiscal stimulus package may not arrive before their Nov 3 Presidential election. US company earnings reporting heats up this week, with several large banks reporting tomorrow night Australian time.
This will be the first quarter of reporting that will capture the brunt of the coronavirus. It will also be interesting to see how many companies will be willing to give forward guidance.
We saw iron ore markets reopen on Friday, with strong gains for the metal after being closed several trading days in China. The strong iron ore price follows strength in other base metals, which could help our materials sector shake off some of its recent nervousness. Large materials stocks remain some of the cheapest equities on the Australian market.
Australian Outlook
Our market is set to open flat this morning, without any real leads from the U.S futures. We are currently sitting around 6100, right between key resistance at our post fall highs at 6200, and the key support at 6000.
Following the stellar run we saw last week, it is no surprise we are having a bit of a breather. Keep in mind, the rally started the trading day following Trump getting the virus and strode through any bad news including the end to stimulus talks in the U.S. This is rather out of character but shows promise.
The dominant pattern on our market is the channel between 6200 and 5775. For us to break through either way, we likely need strong leads from overseas. The 50,100, and 200 moving averages have converged near 6000, spelling more sideward movement.
On Thursday we have local unemployment numbers, which are expected to worsen.
US Markets
US shares rose on Friday, which was the third consecutive day of gains for the average US listed stock. Markets had been optimistic that a fourth round of US fiscal stimulus was shortly to be delivered, but there is certainly no guarantee that this will happen before the November Presidential Election.
On top of this, we’ve seen further devaluing of the Chinese yuan this morning, which could be a drag on US share prices as well. US company earnings reports kicks off this week, which will also have an influence on their movements. Technology stocks were the strongest performers on Friday, while oil & gas stocks fell fairly strongly, most other sectors were flat to slightly higher.
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