I am sure many US fund players are having a happy Thanksgiving holiday. Last night, the rest of the world continued the Trump animal spirits party. The Euro fell to 1.055 and looks to be gathering momentum towards parity. A recent survey of FX players found that an overwhelming 70% expected parity in the Euro.
The USD is applying pressure to bonds and currencies across the globe as some form of reset is taking place.
In Europe, ThyssenKrupp, one of the largest industrials in Germany, missed earnings, but overall the DAX remained higher.
While the US partied, UK markets, with some stocks going ex-dividend, still maintained gains with Anglo American, Glencore and RIO all trading higher.
Italian referendum jitters has kept some pressure on the MIB down 31 points, and the risk is a failed referendum will lead to a general election. Italy recently enacted an electoral law giving any winning political party extra seats, so it’s a winner-takes-all scenario. The risk, as we have seen in current global politics, is for a populist results. Think Greece, Brexit and Trump. In Italy’s case, the Five Star Movement party would be the outlier result. Should this happen, questions will be raised about overall Euro block stability.
Trump continues gathering international commentary, with the CEO of Fiat Sergio Marchionne calling Trump a game changer for the auto industry. He stated that the big risk is the free trade agreement, as FIAT has plants in Mexico, the US and Canada.
Gold, with a current price target of $1100, has given up the $1200 support and finished lower at $1185. Many Aussie gold miner stock prices have entered primary downtrends and will be testing support levels in the coming session. Iron ore remained steady +1.4% overnight, with West Texas crude also holding $48 billion. The larger oilers, including BHP who obtain over 50% of their revenue from oil, should find continued support. BHP’s overnight ADR was $25.91, indicating a flat open.
However, the SPI futures show a 19-point gain, suggesting an Aussie 200 open at 5504.
This 5500 level remains the first serious technical level of resistance as the index heads towards 5600.