The XJO is expected to open higher this morning following a break into fresh highs in the U.S on Friday night. Their futures have also moved strongly into the green.
Our futures have us opening near 8,700 at time of writing. However, with strong U.S futures it wouldn’t be surprising to see that higher.
8,750 is the clear level of resistance that also represents our all-time high. We Tested it late last week, and it seems likely we test it again this week. Roughly 8,650 seems to be key support, which also roughly falls in line with our previous all-time high resistance. We are trading in this range for now, however we must assume that we will eventually break to the upside at some point considering the underlying uptrend. The U.S would need to maintain momentum however, and their market is looking tired in the short-term.
The big news locally in the week ahead is our CPI reading on Wednesday at 11:30am (AEST). It is expected to come in lower, which is exactly what our market wants to see. The big news for the U.S is the Fed interest rate decision on Wednesday night. They are expected to continue holding rates, however the market will be looking for future guidance from Powell. Powell has increased pressure from Trump to cut, but inflation has slowly been ticking higher the past few months. Aside from that, there is U.S consumer confidence numbers tomorrow night, U.S GDP and some employment data Wednesday night, and local retail sales numbers on Thursday. On Thursday night the U.S has PCE data, and to finish the week, we have PPI data on Friday and the U.S has further employment data Friday night. It’s a big week for news, and we could see volatility to return. However, if the data is mixed (especially with U.S earnings underway) our market may feel more comfortable tracking sidewards in that range.
US Markets
US shares rose on Friday, with the SP500 setting its fifth straight all-time high close in a row. US shares drifted higher with optimism around a potential tariff agreement between the US and EU, and that looks to have been agreed over the weekend, which has sent US futures higher this morning. The deal will see 15% tariffs on most European exports to the US, including automobiles. This is down from the 50 percent tariff Trump was threatening a week or so ago. In return, the EU agreed to purchase $750 billion in energy, invest $600 billion in the US on top of existing investments. The deal still needs to be approved by EU member states, and being honest, I’m not sure it will pass. Regardless, in the short-term this will be a bullish driver for US shares. This week will be huge for US economic data, with GDP and a FED meeting the main event on Wednesday night.
Nine of the eleven sector groups of the SP500 closed higher on Friday, with Materials, Industrials, and Technology the best performers. Energy stocks saw the most selling.
Technically, the SP500 recently broke beyond the previous all-time high resistance at 6,300. This indicates further upwards movement, though its hard to say where the move may head. The previous resistance at 6,300 is now likely to act as support.
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