The XJO is expected to open flat this morning following a lacklustre night of trading in the U.S. Their futures are also flat.
Markets seem to be weighing everything up. Uncertainty around tariffs and interest rates are testing the resolve of markets that have been firmly strong since their lows back in April. The U.S has sold off the past couple of sessions, but is using their previous all-time high as support. Conversely, our market is struggling to break through our all-time high resistance around 8,600. This morning, we should test it once again.
Yesterday we managed to quickly reverse opening losses. At one point we were even in the green, but we gave up those marginal gains to finish flat. This general indecisiveness is a story our market has been telling for the past couple of weeks as we track sidewards in the channel.
The RBA held interest rates, much to the surprise of the market who had mostly priced in a cut. Interestingly, our market did not respond. The likelihood of an August cut will now increase, so the market likely doesn’t mind too much.
We should continue to assume both our market and the U.S will track sideward to higher for now.
US Markets
US shares closed mixed overnight with the DOW JONES and SP500 finishing lower, while the NASDAQ finished slightly higher. US shares were set to open higher, but Trump came out with the idea of fresh tariffs on copper and pharmaceuticals, which caused investors to hit the sell-button. Its hard to see the path forward for markets from here, but we have to assume these tariff announcements could lead to falls at some point. The next major scheduled event for US markets will occur tomorrow night with the Fed meeting minutes, which should provide clues as to how likely US rate cuts are in the near term.
Five of the eleven sector groups of the SP500 closed higher overnight, with Energy the strongest performer. Financials, Utilities, and Staples saw the most selling.
Technically, the SP500 has recently pushed through the previous all time high resistance at 6,150. With this level breaking, we would expect further upside, though we did see a bearish candlestick overnight, which could indicate a move back to the previous resistance at 6,150 which may now be tested as support. Or it could indicate a move to the uptrend line, which currently sits around 6,185. 6,300 is now the resistance to watch to the upside.
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