The XJO is expected to open lower this morning following a tumultuous night of trading in the U.S, which saw their market retake earlier sessions losses, but to still finish firmly in the red. Their futures have edged into the green – though they have meant very little this week, with the overnight move often betraying what their futures herald.
Yesterday, we followed the U.S with a strong day of buying, though we only rallied about half what they achieved the previous night – where their market rallied roughly ten per cent, our market only managed five. In fairness, we did not fall as much as they did either, holding up uncharacteristically well despite the panic.
We rebounded intraday from 7,850 resistance, and a possibly a potential downtrend line that can be drawn in since our all-time highs back in mid-Feb. We pulled back to finish just below 7,750 key support – which is now resistance. Yesterday’s intraday pullback, and our willingness to only rally half what the U.S did, indicates that the average investor is likely sitting on their hands.
We have not fallen as strongly as the U.S because the average investor may be feeling tentatively comfortably in holding positions and waiting it out. We are also not at the epicentre of all the mayhem and coupled with how quickly all of this has happened, there is a good case for “wait and see”. Furthermore, there is likely some belief Trump will continue to bend the knee to capital and bond markets and reverse the Tariffs.
On the other hand, we are not see buying with the same gusto. Investors may be tentatively okay with holding for now, but they likely also don’t have the courage to buy this market with so much uncertainty. With a POTUS as unpredictable as Trump helming the world’s largest economy, its not surprising to see our market not wanting to commit either way as much as the U.S.
Expect volatility to remain, and whipsaw movements along with it.
US Markets
US shares resumed falling overnight as perhaps the reality of the tariff situation set in for investors. The higher relatiliatory tariff amount on China actually outweighs all the other initially reciprocal tariffs. This was despite some fairly positive economic data, with US inflation coming in lower than expected in March, though notably this is before almost all the tariffs were implemented. Markets are unsure of what to do from here. There was obviously a huge bounce with the tariff pause, but some of this may have been a short-squeeze, and now a bit more reality is setting in. Still, the buying cannot be ignored and there seems to be money on the sidelines willing to come in. Dont be surprised to see a move back next week, perhaps towards the downtrend line around 5,580 before potentially a resumption in selling. Over a longer-term period, things do not look good, so a restest of 5,000 eventually is also on the cards.
Only one of the eleven sector groups of the SP500 closed higher overnight, which was consumer staples. Every other sector closed lower, with Energy, Technology, Communications, and Discretionary the worst performers.
Technically, the SP500 has found some potential support around 5,000 and now looks like it might pushe back up to the downtrend line, which currently sits around 5,580. Don’t be surprised to see the market then resume selling.
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