The XJO is expected to edge lower on open this morning. The U.S had another indecisive night of trading which saw them retake intraday losses to finish only marginally in the red. Their futures have also started to edge lower.
Yesterday market opened lower, but continued the selling, likely on the back of strong negative U.S futures. The negative futures didn’t end up playing out, but their market did not show any confidence either. Their unemployment rate, retail sales, and PMI all largely came in worse that expected. This increases the likelihood of a rate cut in the market’s mind, but it wasn’t enough to drive them higher. Our market likely looks at their unease and isn’t too fond of the idea of making any gains just yet.
We bounced off key support at roughly 8,570 intraday yesterday – the key level of support during our period of consolidation. The move lower yesterday also confirms that the break higher last Friday was a false one. For now, it looks like we are once again stuck in that consolidation range until the U.S has a directional move themselves.
Both markets have tracked sideward for the past few weeks. We had the RBA and Fed announcements last week, which was not enough to shake thing up. The U.S had some key data last night, that also had not much effect. But it feels like pressure is building for their market to pop either way. Perhaps their CPI reading on Thursday night, and even their session leading into it tonight will see some movement.
US Markets
US shares were mixed overnight, with Technology stocks helping to drag the NASDAQ into the green, while the DOW JONES and SP500 closed lower. It comes after some fairly inconclusive economic data overnight, with a better than expected rise in the number of non-government jobs, but also with a rise in unemployment. Additionally, Retail sales were worse than expected, but retail sales for core items were better than expected. Overall its hard to know whether the data increases the odds of further rate cuts, so the market displayed an uncertain response. Eyes will now turn to tomorrow nights US inflation data, and whether inflation resumes falling, which would likely break markets into fresh highs, or whether it remains sticky and would send markets lower.
Three of the eleven sector groups of the SP500 closed higher overnight, with Technology the best performer, though no sector saw strong gains. Energy stocks saw the most selling, followed by Healthcare and Real Estate.
Technically, despite the recent gains, the SP500 is still stalling at the all-time high peak from October. We will need to see the SP500 close above 6,920 for the bull run to look to continue in the short-term. Should the market close above 6,920, that could be a signal for a rise to the round number of 7,000 points. The good news now looks to be mostly out of the way though, so gains from here might be slow. Should the selling resume, perhaps with a break below 6,800, we could see a move back to 6,550 index points. Overnight the index seemingly found support at the 50-day moving average and held above 6,800, which could be a bullish sign.
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