The XJO is expected to open back above 8,200 this morning after fresh all-time highs were reached in the US overnight.
Yesterday our market was again dissappointed by weakness in China, giving up earlier strong gains to close relatively flat. It looks like Chinese markets were far too positive in the lead-up to the National Day holiday, and that profit taking was taking place on reopen this week. The same looks to be true for iron ore, which also pulled back.
Still, unbelievable strength in US markets (despite the weakness in China and the approaching Hurricane Milton) looks to be forcing our market higher once again. Should the miners fail to rebound, our strength will likely come from the banks and other large-cap non-mining stocks.
Technically, we are likely to aim for the potential resistance level at 8,250 – 8,270, which is our all-time high. Until we see a break of that resistance, or of a break of support at 8,100, sideways movement continues to look like the outcome.
There will be a key test for US markets tonight (and as a result the Australian market tomorrow) with the release of US CPI for September. Should CPI come in stronger than expected, we could see selling as investors reduce rate cut expectations.
US Markets
US shares rose to fresh all-time highs overnight, as investors shrugged off the approaching hurricane Milton as well as the dissappointing Chinese reopen. Prices rose ahead of tonight’s key CPI (inflation) data report with the reading likely to determine whether or not we see another US rate cut in November. After some stronger than expected jobs data at the start of the month, the risk is now that inflation is remaining stickier than expected, which could change the expected rate cut timetable. Following tonight’s CPI reading, US company earnings reporting will start on Friday night. US shares have now technically broken higher, which indicates further upwards movment, though it might be wise to be cautious ahead of the events of the next two days.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Healthcare, Industrials, and Technology the best performers. Utilities and Communications closed lower.
Technically, the SP500 broke above the all-time high resistance level at 5,770 overnight, indicating further upwards movement, though its hard to say where that movement may rise to.
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