The XJO is expected to rally on open this morning following a strong turn around in the U.S last night. Their futures have also moved firmly into the green. The positive swing is likely on the news that a ceasefire between Iran, Israel and the U.S is being negotiated.
Yesterday our market managed to reverse an intraday selldown to limit the session’s losses to our opening at 8,475. U.S futures were markedly in the red, but didn’t get any worse. Our market remained optimistic, and with the U.S reversing their opening losses to finish firmly in the green last night, our market is set to rally strongly today.
We should open near 8,570 at time of writing, reversing seven sessions of losses and putting us back within arm’s reach of all-time highs. If U.S futures remain positive during our session, it seems reasonable to suggest we hold most of the opening gains today.
The next key level of resistance represents our all-time highs at roughly 8,600 to 8,625. Despite the strong buying expected this morning, it would be hard to expect our market to continue to push through this week.
US Markets
US shares closed firmly higher overnight after Iran’s response to the US bombing was fairly limited overnight. Iran sent two missiles towards a US military base in Qatar, warning of the strike in advance. This is seen as a deescalation by markets, and a sign that Iran does not want to pursue a wider conflict. Indeed, after US markets closed, US President Trump tweeted that Israel and Iran would shortly agree to a ceasefire. All of this is very positive for markets. Additionally, US PME data overnight was all largely better than expected, after some recent poor data readings, adding to the overnight optimism. US futures are currently firmly higher as well, and with a potential ceasefire, don’t be surprised to see further upside for US shares in the short-term.
Ten of the eleven sector groups of the SP500 closed higher overnight, with only Energy closing lower. Discretionary, Real Estate, and Staples stocks were the best performers.
Technically, the SP500 bounced from the key potential support level at 5,975 – 5,970 overnight. With a bounce from these levels the SP500 looks further bullish from here. The first target is the June peak at roughly 6,050, if that breaks further gains will look likely.
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