Market Likely to Drift Higher

Without more bad news to drive markets lower, then the tendency to drift higher will persist.

  1. Gold & Silver — Strong support for Gold is at 1850–60 and for silver is at 21.80–90. Traded weak and looked like there was going to be another wash-out but recovered strongly. Positive price action is encouraging, stay on course!

WHAT HAPPENED YESTERDAY

Market Movements as of New York Close 15 Oct 2020
  • U.S. Initial claims for the week ending October 10 increased by 53,000 to 898,000 (expected 830,000). Continuing claims for the week ending October 3 declined by 1.165 million to 10.018 million. The exceedingly high level of initial claims will contribute to the view that the recovery in the labour market is slowing and speaks to the need for more stimulus to keep it from getting worse.
  • Dollar was headed for its best week of the month on Friday, as surging coronavirus cases and stalled progress toward U.S. stimulus had nervous investors seeking safe assets. As fresh curbs to combat COVID-19 were introduced in Europe and Britain, the world’s reserve currency surged to a two-week high of 93.910 against a basket of currencies. It held just below that peak in Asian morning trade. Risk sensitive currencies were hit hardest, with the AUD dropping almost 1% on Thursday to a more than two week low of $0.7057. It has lost 2% for the week, weighed also by a dovish central bank speech. GBP was also heavily sold overnight, dropping more than 0.8% to $1.2891 on concerns about the obstacles keeping the European Union and Britain from reaching a Brexit trade deal.
  • London enters a tighter COVID-19 lockdown from midnight, which with a curfew in Paris leaves two of Europe’s largest cities living under state-imposed restrictions. The U.S. Midwest is also battling record surges in new cases as temperatures get colder, prompting authorities to set up a field hospital in the suburbs of Milwaukee, Wisconsin, in case of an overflow of patients from hospital wards.
  • S&P 500 battled back from an early 1.4% decline on Thursday to close lower by just 0.2%. Value-oriented stocks led the rebound effort at the expense of their growth-oriented peers, evident by the 1.1% gain in the Russell 2000 and 0.5% decline in the Nasdaq Composite.
  • The early weakness was attributed to ostensible growth concerns caused by renewed lockdowns in Europe amid rising cases of coronavirus and by a 53,000 increase in weekly jobless claims to 898,000 (expected 830,000). In addition, disappointing revenue guidance from Fastly (FSLY 89.70, -33.48, -27.2%) did take some steam out of many growth-oriented stocks.
  • Investors, however, steadily bought the dip throughout the day that lifted every sector off its low and notably pushed the S&P 500 energy (+1.2%), financials (+0.8%), real estate (+0.5%), and industrials (+0.4%) sectors into positive territory. Note, these sectors are among five S&P 500 sectors still down for the year.
  • Earnings-driven gains in Morgan Stanley (MS 51.33, +0.68, +1.3%) and Charles Schwab (SCHW 39.03, +1.91, +5.2%) provided the lift for the financials sector, which had struggled this week amid lackluster/disappointing reactions to previous earnings reports. United Airlines (UAL 34.25, -1.36, -3.8%) reported worse-than-expected results, which kept the airline stocks grounded today.

HEADLINES:

BIDEN ATTACKS TRUMP’S VIRUS RESPONSE AS TWO RIVALS HOLD SEPARATE TOWN HALLS

DAY AHEAD

U.S. Retail Sales

SENTIMENT

FX

Market Observation

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord

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