Our own central bank, the Reserve Bank of Australia (RBA), will meet today to decide on interest rates. Previously March was considered a very unlikely month for the next rate cut, but the coronavirus related issues have made today’s decision very much a live one. Technically, the XJO found some support all the way down at 6,250 yesterday, before rallying back towards 6,400. The futures have us opening above the key 6,400 level, which means our next target to the upside would be 6,500. If 6,500 breaks, 6,640 would be the target to the upside. Our movements from here are likely to be heavily influenced by the movements in US markets, as well as today’s decision of the RBA.
US markets enjoyed their strongest rise in over a year, as investors gained confidence that policy makers would act to offset the economic impacts of the coronavirus. The Dow closed 1293.96 points higher (5.09%) and the S&P 500 was up 136.01 points (4.60%). Asian and European markets were mixed, but mostly higher.
Central bankers held a teleconference overnight, where the Bank of Japan, US Federal Reserve, and the Bank of England promised to take action to support their economies if needed. It came as the OECD warned that the shut-downs related to the coronavirus would cause global growth to drop to levels not seen for a decade. Regardless, evidently plenty of investors found stocks they were happy to purchase overnight, with the US markets all climbing substantially. Technically, the S&P 500 rose back above the key 3,020 point level, rising straight to the next resistance right around 3,100. There are additional levels of resistance for the index at 3,150 and 3,200 – if they go, we could see the index head back towards its highs. To the downside, a break back below 3,020 will likely mean further selling.
XJO Implied Volatility fell 3.95% and closed at 24.351%. The US volatility fell 17.18% and closed at 33.42%.
US oil seemed to find something of a bottom, with prices enjoying a seriously large rally.
Gold rose a little bit overnight, prices remain extremely strong.
Iron ore screamed higher, prices rose a considerable amount.
The Aussie dollar rose slightly relative to the US dollar. Our dollar is trading around decade lows.
Markets enjoyed a strong bounce-back overnight, with whispers of stimulus helping to encourage investor buying. Many analysts were talking about how some stocks had returned to attractive ‘buy’ levels. Regardless, risks around the virus persist, and with negative economic reports due to virus related shut-downs, there is the potential for more selling in the near future. The key event to watch today will be the RBA decision at 2:30 PM, with a possible interest rate cut likely to help our market higher. Tomorrow we will also see the release of Australian GDP for Q4 2019′ the number is expected to be 0.4%.