OVERNIGHT MARKET SNAPSHOT FOR MONDAY 29/11/21 (as at 8am AEDT)
- SPI200 (Dec) overnight futures down 104 pts to 7166
- SP500 down 106.84 pts to 4594.62
- NASDAQ Composite down 353.57 pts to 15491.66
- Dow Jones down 905.04 pts to 34899.34
- FTSE100 down 266.34 pts to 7044.03
- DAX30 down 660.94 pts to 15257.04
- GOLD futures US session (Dec) up $8.00 to $1792.30 an ounce
- COPPER futures US session (Comex Dec) down $0.1585 to $4.2790 a pound
- OIL futures US Session (Nymex Jan) down $10.24 to $68.15 a barrel
- CRB Index down 11.65 pts to 226.73
- AUDUSD trading at 0.7123
- EURUSD trading at 1.1317
- GBPUSD trading at 1.3337
- USDJPY trading at 113.3800
- USD Index US Session (ICE Dec) down 0.794 to 96.078
US indexes were hit hard in a shortened session, as covid fears reappeared and drove global markets lower in a massive risk-off move. Markets were spooked with a new variant called Omicron originating out of South Africa and now being found in many other countries. This is leading to new restrictions and border closures as little is known on the variant as yet. There is a view that Omicron is more contagious but less severe and may not be contained by current vaccinations. Either way, markets went into meltdown mode at a time when the liquidity was low for the US long weekend. The Volatility Index rocketed higher which has a flow on affect to options pricing and sent traders scuttling to hedge portfolios. Markets were already on a weak footing due to growing interest rate concerns so the new variant could trigger a deeper fear base selloff…although it will bring into questions the Feds plans to normalise monetary policy and tapering. The DOW closed down 2.53% while the broader SP500 ended down 2.27% and the Nasdaq closed down 2.23% for the session. In Europe, major Indexes were also hit hard, following on from Asian markets selling, as retail and travel stocks bore the brunt of traders fears for the new ‘unknown’ covid variant. Traders were selling out of risk assets ahead of further news on the variant as many saw the market as already over inflated. If the new variant turns out to be just a ‘storm in a teacup’, then we may see another buy the dip scenario….but expecting more cautious trading to start the new week.
The USD Index took a hit as markets went into meltdown mode. The news and fear around Omicron has brought into question the inflation and rate rise narrative and could completely reverse the idea of rate rises. Dollar buyers were quick to lock in recent gains on fears that the new variant will spread further and the world heads back into a new round of lockdowns. As little is known yet and the news wires drive the fear levels higher, traders were getting ahead of the herd and the move was likely exacerbated in a thin market. Expecting that the Dollar could further unwind today and move back below the 96.000 level. The EURUSD was quick to find a bid at the start of the European session and bulls ramped prices higher to squeeze out recent sellers. The move was purely a USD reaction as traders had to do a massive re-adjustment to their inflation views. The move down remains in tact for now and buyers may be looking to squeeze price up to the 1.1360/70 zone and test sellers resolve. The GBPUSD also made its way higher but was in a more controlled move than the Euro. Price broke the recent anchor to the downtrend at 1.3351 but did manage to end below the level into the close. If bulls hold price above the 1.3308 level, then expecting to see more pressure to the upside today. The AUDUSD took big hit lower below 0.7180 at the start of the Asian session and continued to find sellers into the US close as markets went into risk off mode. Price is being anchored down at 0.7156 and may see a flush below 0.7113 today. The next clear level down is the 0.7000 zone. Expecting that price will look to flush into 0.7180 to clear out some stop losses. The USDJPY was hit on both sides by USD selling and JPY safe haven buying. Price has broken the recent uptrend and may look to extend on the move down today into the 112.700 area.
SPOT GOLD initially rallied in Asian and European markets finding some safe haven action but then later fell over once traders started to digest the news and adjust for a new inflation outlook. Still watching for the 1780 level to hold as much of the move off the 1810 highs Friday was in a low volume market and the reaction up off 1780 shows some bulls may want to get more active. Crude Oil was belted lower ending down 13.06%. The massive de-risking in share markets showed up with a vengeance in Oil as price took out support at 74.75 and failed to bounce back. Traders will have been frantically trying to makes sense of the move down over the weekend so we may see some bargain hunting today. Copper also took a hit when support levels were breached sending bulls running for cover. The move lower has taken quite a lot of heat out of the rally but I expect that traders are taking a cautious approach to the action for now until more news comes to light on Omicron. Price could easily further unwind into 4.0335 support in coming sessions.
Cryptocurrencies also saw a risk off move as prices heading south across the board Friday. Buyers did step into the action over the weekend as bargains hunters provided some support on majors Bitcoin and Ethereum at $53K and $4 respectively. Bitcoin is currently trading at $55037.40 up 0.90% while Ethereum is trading at $4148.80 up 2.28% and Ripple is at $0.94055 up 0.05%.
The ASX200 was all one way action from the open Friday as the ASX200 went into meltdown mode. The Index ended the session down 128 points or 1.73% to 7279.3. Shares in Energy, IT and Resources were hit the hardest which may be the case again today on the ASX open. Falling stocks outnumbered advancing ones by 1135 to 366 and 340 ended unchanged. Asian markets also took a hiding with the Hang Seng down 2.67% and Nikkei down 2.53%.
The ASX200 is expected to open down 100 pts after the SPI200 took another beating Friday night into the weekend.
AUD Company Operating Profits 11:30am
EUR German Prelim CPI All Day
JPY BOJ Gov Kuroda Speaks Tentative
USD Pending Home Sales 2am
EUR ECB President Lagarde Speaks 4:15am
CAD BOC Gov Macklem Speaks 6am
USD Fed Chair Powell Speaks 7:05am
SPI200 INTRADAY LEVELS TO WATCH