We saw a shift overnight, which was led by Oil recovering above $40.00 US a barrel and insight that construction is still looking strong in the US with Fastenal reporting growth in earning despite Covid-19 shutdowns. This saw Materials, Energy, and Industrial led the move higher.
OPEC is still to meet on Production curbs this week, so there are still some risks coming for the Energy sector.
Talks last night that the FED is considering Yield Curve intervention also helped sentiment. This continues the rhetoric that markets will continue to go up on stimulus talks. Locally we are also waiting for further news on extensions to Keepers and Seekers allowances.
Earnings are going to start coming thick and fast from the US, tonight we will be seeing more big US banks reporting, Goldman Sachs Group, Bank of new york, and U.S. Bancorp. Also, we have eBay and Kinder Morgan.
With strong leads from both the U.S market and their futures this morning our market is set to open around the 6000 key resistance level. If their futures remain strong during our session today, we should break and finish above 6000, a bullish sign that we are going back towards our local highs around 6100 – 6200.
The trend line held yesterday and today we will be bouncing from it, indicating our market may be ready to continue higher. For this to eventuate, we will likely continue to need positive leads from the U.S.
Bullish sentiment seems to be coming back into the market on the back of vaccines hopes. Commodities remain strong but our strong dollar against the USD puts some pressure on our exports. On the other hand, NSW is on a tight rope with new cases arising and VIC remains in shut down. Mixed news still dominates the market so we could see continued sideward movement, but we might be seeing early signs of the Bulls coming back in.
US stocks rallied overnight, with JP Morgan exceeding their expected earnings by around thirty percent and Citigroup also beating their expectations by a similar amount. These reports more than made up for a weak report from Wells Fargo, who moved to a large loss. All of the major companies reported results that were down on this time last year. Markets continue to weigh up a future outlook that likely depends on economic reopenings and successful virus management against a continued spread of the virus. The spread of the virus is continuing globally as fast as it ever has and massive amounts of stimulus are helping investors to continue buying regardless. However, earnings expectations in 2H 2020 and 2021 appear largely based on having getting past the worst of the virus and it remains to be seen whether this can be achieved.
The Basic Materials and Oil & Gas stocks were the strongest performers overnight, with economic bellwether Fastenal having a standout earnings report, indicating that there is still plenty of industrial economic activity.