The XJO is expected to edge lower on open this morning following a small pullback in the U.S overnight. U.S futures are also flat.
Yesterday we managed to hold ground, defying expectations. We managed to reverse over half the opening losses to finish only mildly in the red. The U.S had rallied about two per cent more than our market from their lows before the selling, so it seems fair that our market did not sell down as much either. Especially considering U.S futures moved from hard in the red to mildly in the green during our session, paving the way for our market in finding its courage.
It would also be reasonable to suggest that our market bounced off the short-term uptrend line intraday yesterday. The U.S may have done so too last night. If these short-term uptrends can hold, then further gains are in store – but this doesn’t seem too likely considering the looming “liberation day”.
Markets look overbought in the short-term, so despite the small falls we have seen, we should at least expect sideward movement. The U.S has pulled back further, so if they stabilise our market seems likely to translate that to sideward movement overall rather than further gains or losses.
US Markets
US shares closed lower overnight, with small-to-moderate losses across the three major indices. It was a back and forth session where prices fluctuated from the green to the red. There was little in the way of fresh economic news overnight, though that will change with tonight’s February PCE price data – a measure of inflation. This data will likely indicate whether interest rate cuts will continue to happen from here or not. The SP500 may have bounced from a short-term uptrend line overnight as well, so we will need to see if that plays out in the coming sessions. Still, the big worry for markets remains the Trump tariffs and the next round is scheduled on the 2nd of April – unless these tariffs are lower than expected, we could see further selling.
Three of the eleven sector groups of the SP500 closed higher overnight, with only Staples seeing notable gains. Of the sectors to close lower, Energy saw the most selling, followed by Communications, and Technology stocks.
Technically, the SP500 stalled at the resistance level at 5,775, which is where the 200-day moving average sits and has now fallen from this level, which could indicate further selling. However, overnight it seemingly reacted to a short-term uptrend line, leaving a potential ascending triangle – we would need to see a break of 5,775 for this to be confirmed. Should the index close below last night’s low, that would be a bearish signal with a possible downside target at the recent lows around 5,550, which may act as support.
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