Most things came to a grinding halt overnight with US closed for a public holiday. Leads from Europe where soft as covid numbers continue to damper sentiment.
US markets continue to look a bit overbought here. At this stage, the seasonal pattern is playing out. We saw a run in the US reporting season with over 80% of companies once again beating earnings expectations. From here typically we see a pullback or some weakness late Nov early Dec which sets up for a Christmas rally. The next test will be the Debt ceiling issues.
Daily virus numbers worldwide fell back to just below 3 million a week in October but continue to climb. Locally, Australia has now hit over the 86% fully vaccinated. NSW and Vic have surpassed the 90% target. All states are above 70% targets. Over the coming months, we expect travel restrictions to continue to ease and immigration numbers to kick up through next year.
We saw a large move in the miners this week which was triggered by 4 days of strong gains in Iron Ore futures. The Iron Ore miners are still cheap at these levels even if Iron Ore remains sideways at US$100 a tonne. But be aware that the volatility in this space is likely to remain as steel production caps will remain until after the Winter Olympics in February next year.
The XJO is expected to open flat this morning, following another similar yet volatile night of trading in the U.S. U.S futures have edged into the green, which should help keep us buoyed today. As it stands, it seems we are set to continue trading sideward near 7,400 and it is becoming clearer that we will need to see the U.S break their own consolidation before we have permission to break ours.
We are likely to see strength continue in the XMJ today thanks to further gains in Iron Ore and a lower AUD. The XFJ has stalled around these levels, with the banks finding good support. If they can at least track sideward we should see a higher market today.
US shares were closed overnight for the thanksgiving public holiday. They will reopen tonight for a shortened session.