MARKETS SPECTATOR: Withdrawal symptoms

US markets retreated overnight amid concerns over global growth forecasts. The domestic market looks set to follow a similar course at the open.

US markets are all significantly weaker this morning as they appear to be ignoring the latest round of easing in China and instead focusing on global growth concerns and nervousness ahead of the earnings season, which kicks off with Alcoa today.

SPI futures are indicating a pullback on the open of around 0.65 per cent, with all sectors likely to see some selling pressure following broad-based offshore weakness.

One of the brighter stars may be the energy sector, which had a very strong session yesterday. The buying should continue there as oil is trading higher by more than 3 per cent at around $US92.20/bbl.

Given the serious outperformance seen in recent days, the big question is going to be how much notice the domestic market takes of overseas weakness. My gut instinct is that we’ll see a decent retreat on the open before buyers use the dip for better entry prices.

The only release of note for the Australian market this morning is the Westpac consumer sentiment index due at 10.30am.

There doesn’t appear to be any particular worry hanging over the US market, but rather a sense that this earnings season is going to be trigger to derail the recent rally heading into the early November election.


The above technical chart of the broad-based S&P 500 index is also causing some concerns for US traders. The blue line represents resistance where the market recently failed at. Now, in overnight trade we can see that currently it looks like the S&P 500 is going to close down below the red rising uptrend sign, which is an early warning sign for a possible trend change.

We would need to see the market move and close below the green support line before this trend change could be confirmed.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free