US major indices leapt higher overnight on strong reporting. Many of the US banks are beating expectations which have investors more optimistic for earnings across the board. Over the next 3 weeks, we will see most stocks in the US SP500 and Nasdaq report.
From a seasonal point of view, this is generally a bullish time of year. If the issues that dropped market in September do not get resolved though we will likely see another dip in November or early December. The US debt issues will become a worry if not resolved as we approach that December deadline. The FED will also report early in November, we expect the FED to start tapering also in Nov.
Daily virus numbers worldwide are still declining. Locally NSW numbers are trending down. Victorian numbers jumped again with a few days in a row above 2,000. Vaccination numbers continue to climb as we are set to reach national targets in November. Nationwide we are at 83.64% first dose. NSW has hit 91.10% first dose and has now surpassed the first target of 70% second dose and will hit the 80% target in around 1 week. Vic is at 87.15% first dose and 62.65% second dose. At this stage, Vic is still playing some catchup but is likely to hit 70% second dose by the end of next week. There is a lot of positive talk around ending lockdowns and reopening the economy, which could explain some of our relative outperformance for the past few days.
The XJO is expected to open higher this morning, following a strong move in the U.S overnight and their positive futures this morning. Our open should have us back at yesterday’s highs, which we retreated from to sit at about half the day’s trading range.
Yesterday we likely saw a break of the pennant pattern to the upside, and this morning’s push higher will confirm it. The U.S also broke from their own pennant or descending triangle in similar fashion last night. If their earnings remain positive, this could be the boost that markets need to get back to previous all-time highs. Now that the debt ceiling issue has been kicked out to December, there is little standing in the way. Markets will be keeping a keen eye on both company reporting and economic data, but recent history has mostly shown to expect positive reports.
The next key resistance is roughly 7,400. This level has been strong both historically and recently, and should prove a sticking point for the market. If positive sentiment remains, then roughly 7,300 might prove to be a short-term support as well.
US shares jumped strongly higher overnight, with prices enjoying their strongest one-day rise since March. Strong corporate earnings were definitely a driving factor in the move overnight, with just about every large reporting US company once again exceeding analysts’ earnings forecasts. Bank of America, Morgan Stanley, and Citigroup all reported earnings overnight and rose after their results. As did chip-making giant Taiwan Semiconductor and health insurer UnitedHealth. We also saw better than expected US jobless claims overnight, as well as smaller than expected increases in producer prices; which is positive given the concerns around inflation. There was however a build-up in US oil inventories, though this wasn’t enough to send oil prices lower. Every major sector of the SP500 closed higher overnight, with Materials and Technology the strongest sectors, followed by Industrials, Communications, and Financials.