News & Analysis

Overnight on Wall Street: Tuesday 15 September 2020

September 15, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

An environment of caution is prevailing in the stock market. Global stocks were mixed on Monday – Asian stocks and US stocks performed better than European stocks.


Source: Bloomberg

Wall Street kickstarted the week on a better note with all major US equity indices ended in positive territory lifted by vaccine hopes and the rebound in mega-cap tech stocks:

  • The Dow Jones Industrial Average added 328 points or 1.2% to 27,993.
  • S&P 500 rose by 43 points or 1.3% to 3,384.
  • Nasdaq Composite added 203 points or 1.9% to 11,057.

The sell-off in the tech sector has tamed down and the tech-heavy index got lifted by 1.9% on Monday, climbing above its 50-day moving average.

However, the sentiment remains fragile due to the stalemate over the stimulus package in the US. Investors fret that the political gridlock will prevail up to the election. While vaccine updates, improving economic data and the Fed is supporting the US share market, investors might need another round of stimulus before pushing stocks higher.

Currency Markets

In the FX space, major currencies were stronger against the US dollar. The New Zealand dollar and Japanese Yen were among the best performers.


Source: Bloomberg

The Yen gained strength on the announcement that Japanese Chief Cabinet Secretary Yoshihide Suga won 377 of the 535 votes to replace Shinzo Abe as the new leader. The new Prime Minister looks set to follow the steps and framework pushed by Prime Minister Shinzo Abe. 

For the shart of the day, Adam Taylor CTEe takes a look at the AUDJPY:

As the Japanese Yen continues to strengthen on the back of reports suggesting Yoshihide Suga will become Japan’s next prime minister, in today’s Chart of The Day, we will look at how a stronger Yen may impact an already resilient Aussie Dollar.

Without going into the fundamentals of recent Japanese politics, it seems reasonable to assume that confusion and uncertainty surrounding Abe’s decision, coupled with ongoing pandemic problems, have weighed heavily on the Japanese Yen since March. The longer time frames show this much clearer, but the hourly chart above hints at a possible change in overall direction.

Generally speaking, we can see how price action during the month thus far has held a tendency to drift lower and currently sits below the 200-day moving average line. Even this 200 MA appears to be changing direction and turning much more bearish as September progresses.

It’s important to remember that on the daily time frame, AUDJPY remains above the 200 MA, and for all intents and purposes, the longer-term picture still looks bullish from a technical viewpoint. The point here is to link these two timeframes and consider the possibility that the hourly chart above could be prepping us for increased demand in the Japanese Yen and a weaker Australian Dollar.

The current weekly pivot point of 77.06 acts as strong short-term support with the pair struggling to close beneath this level. Should sellers gain momentum, then the next downside target appears to be around 76.00.

Alternatively, the 200-day MA provides some resistance. However, the previous weekly pivot of 77.50 looks more viable as both a potential ceiling and upside target, considering it held four times before this month.

So as Japan’s leaders begin to provide some clarity of leadership and further policy direction, this air of stability is likely to continue creeping into the market. This type of certainty is what the market craves and may well knock the Australian Dollar of its perch, forcing the AUDJPY lower.

The British Pound also advanced higher despite Brexit woes. The UK Prime Minister is facing growing opposition within its own party over the controversial Internal Market Bill. The GBPUSD pair was a tad bit firmer on Monday around the 1.28 level mostly on the back of the dollar weakness. However, the Sterling remained under selling pressure as the Bill is plunging Brexit in another crisis. 

Commodities

Crude oil prices failed to lift despite an improvement in risk sentiment on Monday. The oil market was under selling pressure last week the fears of the demand outlook, risk-off environment and bearish weekly reports. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading firmer around $37.21 and $39.57 respectively. Weekly oil reports will be the key events for the oil market.

Gold

Gold traded mostly within a range recently. The XAUUSD pair edged higher, lifted by a weaker greenback and geopolitical tensions. Traders will likely keep an eye on geopolitical headlines, Fed’s meeting and key leading economic data for fresh trading impetus. As of writing, the XAUUSD pair has consolidated around $1,955.


Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • REINZ House Price Index, and Westpac Consumer Survey (New Zealand)
  • RBA Meeting Minutes and House Price Index (Australia)
  • NBS Press Conference, Industrial Production and Retail Sales (China)
  • Claimant Count Rate, ILO Unemployment Rate, and Average Earnings (UK)
  • ZEW Survey Economic Sentiment and Labor Cost (Eurozone)
  • ZEW Survey – Current Situation and Economic Sentiment (Germany)
  • Industrial Production (US)
  • GDT Price Index (New Zealand)

 

Wednesday, 16 September 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.058 0 0.127 0.007 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 19.715 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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