Positive reporting was still not enough to drive markets higher overnight. Which is no surprise considering the US election is just around the corner. So far, the banks are generally beating expectations on earnings, but many are still fearful of what is to come next year.
At this stage, Biden is winning in the polls, and markets seem to be very receptive to a Biden win. Which is a bit of a change to what many were thinking only a few months ago.
Locally we are still seeking some clarity on China, the recent halt on Australian Coal imports is of concern for many. At this stage, there is no proof that this is linked to recent trade tensions. This could just be something similar to what has happened in the past which is holding back imports to stay within quotas.
With negative leads from the U.S last night our market is set to have a soft to negative open. U.S futures are in the green this morning, which is likely why we are expected to only fall 20 points or so.
Yesterday the XJO managed to hold key resistance at 6200 – the top of the channel and post fall highs. We have tested this level four to five times in the past, failing to get through each time. So far, it looks like we are failing to do so this time as well. The expected bearish open should have us breaking the short-term uptrend line as well, but we will need to see a further sell off for a break to be convincing. The stochastic are extremely overbought. This makes sense as the market’s recent rally is rather out of character. The move was so strong in such a short time frame, it also makes sense as to why it has run out of puff.
Everything at this stage indicates our market holding 6200. This could mean a fall by extension, or a sideward move. Which it will be likely will come down to how the U.S performs.
US stocks fell for the second session overnight, with several large banks falling after reporting big drops in earnings. Bank of America and Wells Fargo and Co were some of the biggest loser, with each of these two large banks falling significantly after reporting weaker earnings than last quarter. US company earnings reporting is ongoing, so make sure you stay updated with how it is progressing; tonight we will see reports from Morgan Stanley and Atlassian.
It is also looking increasingly unlikely that there will be the long awaited fourth US fiscal stimulus deal ahead of the election, which is definitely putting a dampener on market movement. Overnight we saw a report that US producer prices for September were stronger than expected. Basic materials an Oil & Gas stocks were the strongest performers overnight, while telecoms and financials were the weakest performers.