The XJO is expected to edge higher on open this morning.
The U.S was closed Friday night. Their futures closed firmly lower on rigid employment data and with Trump’s tariff deadline approaching, wiping out Thursday’s break into fresh all-time highs. They have since turned marginally green.
We are expected to open somewhere around 8,625 as we continue to flirt with the key resistance that represents our all-time highs. The past few sessions have seen us unwilling to push through despite a strong run in the U.S. Their market made several all-time high closes last week, but we have not been able to translate that into anything other than stubborn consolidation.
There seems to be a short-term ascending triangle in play. It is characterized by the short-term uptrend line that can be drawn in since the lows of our recent selldown a couple of weeks ago. It describes the bullish pressure our market has been feeling of late, but unwilling to break through and make fresh highs. In other words, daily lows are getting higher, but daily highs aren’t.
Considering the technicals, we should assume we will eventually push through. We should assume that our market will remain bullish to sidewards until we see evidence of otherwise. Though remain cautious, as the U.S is due for some profit taking in the short-term, and considering our market’s cynicism, we shouldn’t have too much trouble selling down either.
We have an RBA interest rate decision tomorrow at 2:30pm (AEST). Up until a couple of months ago it wasn’t believed the RBA would cut in this upcoming meeting. The shift in that belief has likely been the largest contributor in our market’s rally. It is expected the RBA will cut from 3.85% to 3.60% tomorrow. However, the likely hood of an August cut is now decreasing. With the rate cut tomorrow already baked in, the market, as usual, will be focusing on future guidance from Bullock. If she indicates that August is a long shot, don’t be surprised if the market gives up some ground.
The U.S has the minutes from their last Fed meeting on Wednesday night. It’s a contentious focus point for the U.S as Powell has stated with no uncertainty that he is reluctant to cut rates with Trump’s trade isolationism. Trump, in classic fashion, is trying to get rid of him.
Aside from the developing story on monetary policy both locally and in the U.S, there is little else macro-economic data of note this week.
US Markets
US markets were closed on Friday for the Independence Day holiday, though US futures traded moderately lower. The big test for US markets this week will be Trump’s 9th of July deadline for the reciprocal tariffs to be put back in place. Trump delayed the tariffs for 90 days to allow time for countries to make deals to avoid the tariffs, but few deals have been made in that time. We will need to wait to see if markets have another strong, negative reaction if the tariffs are replaced.US futures did rise on open this morning after Treasury Secretary Scott Bessent indicated that some countries lacking an agreement by the deadline would have the option of a three-week extension to negotiate.
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 prices are elevated and gains may be smaller from here. 6,150 is now the potential support to watch to the downside.
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