The XJO is expected is expected to edge lower on open this morning.
The U.S overnight managed to reverse intraday losses to once again finish in the green, but clearly stalled at previous all-time high resistance. Our market had a stella run yesterday, pushing through 8,500. With negative U.S futures this morning and the U.S looking like it has buying fatigue, its not surprising we are giving up some of yesterday’s gains on open today.
At this stage our futures are pointing to an open at roughly 8,500, perhaps using it as a support. By the time the market opens however, if U.S futures remain a good measure in the red, our market may fall back through it. If we do see a sell off today, which seems reasonable, then 8,450 is the next key support.
It would not be surprising to see our market hold around these levels in the short-term. With the some of the tariffs sort of out of the way for now, and proof that the buy-the-dip remains strong overseas, our market can continue pricing in the RBA rate cut expected later this month. Provided the U.S indicates it is willing to keep moving higher, our market shouldn’t have a problem following for now.
The most recent trough at roughly 8,350 from earlier in the week was also a continuation of an underlying uptrend line that has been in play since our late December lows. With us holding around our all-time high resistances, our market is trading in an ascending triangle. Typically, we expect triangles to break in the direction of the underlying uptrend, giving further credence of fresh highs to come.
But. Taking a step back and looking further ahead, large question marks remain. Earnings in the U.S have been poor this season so far. Our own earnings kick off in earnest next week, and we should expect similar results. With inflationary policies from Trump, a Fed signalling that it is pausing rate cuts, and companies making less money on average, markets are due for at least a correction (~10%). The writing is on the wall. The cracks are showing. But markets can keep irrationally pushing higher before reality sets in – especially with the U.S spending as much money as it is. Ultimately we trade what we see, and for now that remains cautiously bullish.
US Markets
US shares closed mixed after a mostly negative session, with prices trading lower before again staging a rebound late in the session. After US markets closed, US futures dipped after Amazon reported results, disappointing with their forward guidance. US company earnings has been disappointing in general, with Google falling seven percent after its results, along with other notable misses. Other negative news items have also come out, including Chinese tariffs and Chinese AI competitors. Still, US markets have pushed higher. Currently US markets continue to rise with the liquidity being pumped in from government spending. However, they are vulnerable to shocks to the downside and these are likely to come with news and events moreso than anything else. Tonight we will see US unemployment data, which could drive movement. Markets want to make sure that unemployment is still strong in the face of a slowing economy.
Technically, the SP500 bounced back off the support and trend line early this week, the SP500 now looks likely to head back towards the all-time high just above 6,100. However, markets are very news driven at the moment, so there is a risk that something could come out to disrupt these technicals.
Eight of the eleven sector groups of the SP500 closed higher overnight, with Staples, Financials, and Technology the best performers. Energy and Healthcare stocks saw the most selling.