The XJO is expected to open practically flat on open this morning near 8,935 at time of writing. This follows a U.S last night that could not commit to a break into fresh all-time highs, as their shed their session’s gains to finish practically flat. Their futures have started to dip.
Markets are likely still digesting the Fed meeting from early this morning (at 6:00am AEDT). We are also likely still digesting our stronger than expected CPI data yesterday which likely points to a rate rise this side of the year. Going from an expansionary cycle, which is reasonable to say takes the lion share’s of responsibility for the gains we have seen over the past two years, to a contractionary cycle, should not be good for our market. Yet we continue to trade in an uptrend, and our market barely registered it yesterday.
However it is also fair to say that we are overheated once again in the short-term and likely due for some selling soon. Yesterday may be the beginning, but don’t be surprised if it simply allowed us to reset for a continued move to 9,000 or above. It seems likely to be determined by how the U.S trades from here.
US Markets
US shares were mixed to flat overnight, with little change across the major indices. The big news was the Federal Reserve meeting, which left US interest rates on hold with warnings of a rebound in inflation. After US markets closed, there were some mixed earnings reports, with Microsoft falling strongly in after market trading after its earnings report, while Facebook and Tesla both traded higher after their reports.
Four of the eleven sector groups of the SP500 closed higher overnight, with Energy and Technology the best performers. Real Estate, Staples, and Healthcare saw the most selling.
Technically, with the recent strength the SP500 has pushed back towards the all-time high resistance, though it has stalled at this level of roughly 6,990. The index tested that level overnight but reversed from it. We will need to wait to see if the market can break above 7,000 points before further gains will look likely. Should the index hold this level as resistance, that could be a sign we will see a move to the 6,750 support level.
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