The XJO is expected to open lower this morning, following renewed selling in the U.S overnight. Their market made fresh lows and we should follow suit this morning.
Yesterday we paused, doing practically nothing bar returning inside the Bollinger bands and normalising volatility. We didn’t get to share in the rebound the U.S saw Friday night. Our market has returned to cynicism, where it is more than happy to share in the losses – as seen this morning, but very reluctant to rally alongside the U.S if they see a rebound. In fairness, U.S futures were starkly in the red yesterday.
We paused at key support at 7,950, but this morning we will break lower. Our expected open as of writing is around 7,900, which is another key level historically. U.S futures are flat, so don’t be surprised to see us hold that level. However it seems more likely that our market continue lower and move to 7,850 today – another key level historically.
Both our market and the U.S have fallen about eight per cent. We are in correction territory. Coupled with how quickly we have fallen, it would stand to reason that we should see a rebound soon. This selling is not sustainable, and will need to shallow out or pivot.
US Markets
US shares fell very strongly overnight with Trump implying the possibility of a recession due to his tariffs and other policies. When asked if his tariffs would trigger a recession, Trump stated “I hate to predict things like that. There is a period of transition because what we’re doing is very big.” More tariffs and reciprocations continue to be place on and by the US and tariffs on steel and aluminium are expected tomorrow night. Tariffs on untouched trading partners are expected on the second of April. Should these tariffs remain in place for any period of time, the chances of a US recession will rapidly increase. Whether Trump is willing to start or recession, or perhaps even trying to start a recession is impossible to know. What we do know is that markets will continue to sell down in the face of tariffs and declining economic data.
Nine of the eleven sector groups of the SP500 closed lower overnight, with only Energy and Utilities managing to squeeze out a gain. Every other sector closed firmly lower, with Technology, Discretionary, and Communications seeing the worst selling.
Technically, the SP500 broke below the lows of October and November, around 5,680-5,700 index points, this indicates a fall to the next level, which would be a technical correction (10% fall from the peak), which would come in around 5,540. Should the market rebound from here, the previous support at 5,850 is likely to act as resistance.
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