The SP500 and Dow both closed at their all-time high resistance levels. The Nasdaq closed slightly in the red. Strong earnings results from US-listed companies continue to push markets higher. Expectations had been lowered for this US earnings season, on the back of high covid cases and supply chain issues, but so far just about every major stock has beat expectations.
At this stage, the typical seasonal pattern is playing out perfectly here. We would expect the bullish momentum to continue through the US reporting, then a pullback at some point in November / early December. This then sets things up for a rally into Christmas. This year the US will need to deal with headwinds in Nov and Dec from the debt ceiling issues and the FED starting to taper. The FED will meet next in the first week of November.
Daily virus numbers worldwide continue to decline and are now almost half of what they were in early August. Locally we have seen NSW reach their targeted vaccination rates, allowing them to end their lockdown. The lockdown in Victoria is also poised tonight with the reaching 70% double dosed. Vic is expected to hit the 80% mark within the next week or so. The end of these lockdowns should be good for the ‘reopening stocks’, such as travel, retail, tourism, or hospitality stocks, and will also help the wider economy.
Oil prices continued their climb overnight and the prices of many metals are also very strong at the moment. Iron Ore is the one thing that remains relatively weak compared to prices earlier this year, though its selling seems to have stalled for now. In this environment of high commodities prices, keep an eye on the energy and materials stocks for some good buying opportunities down here.
The XJO is expected to rally on open this morning, following another strong night of buying in the U.S overnight.
Yesterday, we saw a repeat of the previous session where red U.S futures through our session held us back from following their rally. Today, U.S futures sit flat, so our market may have more confidence. In addition, the 7,400 level has proven once again to be a key level of resistance that our market remains reluctant pushing through.
The miners have softened but with Iron Ore stalling from the selling, we could see renewed vigour in our second largest sector – especially with gold and oil continuing their ascent. The Financials continue to stall at their key resistance, trading in an ascending triangle. One would expect a break higher considering that three of the major four are reporting in a week or two, and we often see a strength leading into them.
US hares closed higher again overnight, extending their incredible rise. The US SP500 is now pretty much back to its all-time high level, after a stronger than expected earnings season brought enthusiasm back to investors. That earnings season strength continued overnight, with better than expected results from majors like Tesla, Nestle, Verizon, and IBM. US economic data was also largely positive overnight, with a drawdown in US oil inventories, and strong US mortgage numbers. Eight of the eleven sector groups of the SP500 closed higher overnight, with Utilities and Healthcare faring the best. Technology fell slightly, as did Communications.