US indices surged over 2% last night as corporate earnings smashed market expectations, with the technology and healthcare sectors leading the gain.

Upbeat third-quarter results from Goldman Sachs, Morgan Stanley, BlackRock, Netflix and United Health Group boosted market confidence and led to a broad-based rally in all sectors. Investors are probably taking advantage of the recent correction to ‘buy on dips’. Earnings are likely to be the focus in the weeks to come.

Meanwhile, investors should keep an eye on the upcoming US mid-term elections, the result of which will largely affect the Trump administration’s infrastructure project if the democrats take the house and/or senate. Today, traders are also watching the CPI data in the eurozone and UK, US housing starts and DoE crude oil stocks for clues of the health of economic development in those countries.

Technically, the Dow Jones Index has rebounded to a key resistance level of 25,730 area (38.2% Fibonacci retracement). Breaking out above this level will open up for more upsides towards the previous high of 26,800 area. The momentum indicator RSI has jumped to 44% from 24% a year before, suggesting the short-term correction is over, and market sentiment has swung up again.

In Singapore, the Straits Times index rebounded sharply early this morning, following the strong US session overnight, as positive US earnings surprises cleared concerns on growth and trade threats, at least for now. Information technology, banks, offshore & marine were among the outperformers.

Despite surging over 50 points this morning, the Straits Times is still close to 20-month low, weighing down by negative overseas factors and concerns. Investors probably need to see strong earnings from local stocks to change their bearish view on the market.

US 30 - Cash chart

Market calendar

By Margaret Yang in Singapore

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. CMC Markets is regulated by the Monetary Authority of Singapore.