The XJO is expected to edge higher on open this morning following another lacklustre and indecisive night of trading which saw their market finish practically flat. Their futures are also flat.
It seems their market is holding their breath heading into the Fed meeting tomorrow morning (at 6:00am AEDT). Yesterday we had our own RBA interest rate decision where they kept Australian interest rates unchanged. This was unanimously expected, and so it had little effect on the market. In the accompanying statement, the RBA acknowledged that inflation “has picked up more recently”, but that “some of the recent increase in underlying inflation was due to temporary factors and there is uncertainty about how much signal to take from the monthly CPI data”. Regardless, inflation is rising again and if that continues, the RBA won’t be able to ignore it.
The RBA statement was perhaps slightly more dovish than expected, as they didn’t acknowledge the (real) possibility of rate rises in 2026. As a result, our market did see minor buying, though it didn’t last long. By close we continued to trade near the day’s lows, and still within the tight consolidation range.
Looking forward, the Fed will meet for their December decision tomorrow morning at 6:00am AEDT. They are expected to cut interest rates. This expectation has been a bullish driver for US markets, acting like a carrot to pull prices higher into the event. However, once the cut happens, US investors will then look towards the Fed meetings of 2026 – and cuts at those meetings look less likely for now. This is due to US inflation remaining fairly sticky and well above the Fed’s target range. As our market looked to our RBA’s statement yesterday, so too will the U.S look to the Fed’s and try garner any guidance on the future of monetary policy. Don’t be surprised if markets are woken from their sidewards stupor by the end of the week.
US Markets
US shares again saw some selling overnight, though the movements were fairly mixed. Prices initially traded higher but pulled back around the close. Largely it seems that US shares are tracking higher into tonight’s FED meeting, where they expect another interest rate cut. This interest rate cut has been a bulllish driver for US shares and it has allowed them to return towards their all-time highs. However, there is a chance that this is the last cut, or at least that not many cuts remain this easing cycle. As a result, it is possible that the market reacts negatively after the cut happens – if the FED signals that further cuts are unlikely. There isn’t much other data this week so it will be all about the FED meeting and the reaction to the rate cut and the accompanying statements.
Six of the eleven sector groups of the SP500 closed higher overnight, with Energy the only sector seeing notable gains. Healthcare and Industrials stocks saw the most selling.
Technically, the SP500 is seemingly stalling out just below the all-time high resistance. Over the past few sessions the index has shown something of a bearish signal, which would indicate a move back towards 6,750, which is also roughly where the 50-day moving average sits. The stochastic is also looking quite overbought, which also suggests we could see some profit taking. However, it is worth noting that the index remains in an overall uptrend, and until we see some lower peaks and troughs, we have to assume the upwards momentum will eventually prevail.
Want to continue reading?
This is only an excerpt from todays TradersCircle Members Morning Market Update and doesn’t include the key data and charts our traders are keeping an eye on every day. Become a member today for this plus full length mid-day and end of day updates, trade recommendations, trade group webcasts, and much more!