The XJO is expected to open flat this morning. The U.S edged higher overnight, but due to their positive futures yesterday, our market has already likely priced that in. Their futures have also edged into the green this morning.

Yesterday we began what looks like a recovery, however we gave up some of our intraday gains to finish on the key resistance we have been grinding along the past week or so. We should flirt with it once again on open this morning, but if U.S futures remain at least marginally positive then we could see a proper break higher.

However, we have local CPI at 11:30am AEDT. CPI is about as important a release as our market gets in this climate. CPI has remained frustratingly sticky, which has left our nation behind on the path towards interest rate cuts. Indeed, the RBA at one point earlier in the year was threatening rate rises. CPI is expected to cool YoY and MoM, however part of that will be due to the energy rebate. The market will need time to sift through the numbers, which will likely get lost in the sauce of our daily trading. However, if the CPI numbers come in unexpectedly higher or lower, it will likely have an immediate effect on our market today – albeit not necessarily a large one.

US Markets

US shares were mixed overnight, the DOW JONES closing lower, while the SP500 and NASDAQ closed slightly higher. US markets are currently focused on earnings results, though tonight will also include a very important third quarter US GDP reading. Growth is expected to remain strong during the quarter, though it is unclear if shares want to see slowing growth (and more rate cuts) or stronger growth and higher-for-longer rates. Markets are clearly concerned around persistently high inflation and bond yields have rallied strongly since the Fed’s September rate cut. After US markets closed, Google reported better than expected results, and its shares are currently around 5 percent higher in aftermarket trading. Meanwhile, chipmaker AMD is currently strongly lower in aftermarket trading following a disappointing announcement. Given the size of Google, this has pushed US futures markets on the whole higher.

Only two sector groups of the SP500 closed higher overnight, with Communications and Technology rising fairly strongly. Every other sector was flat-to-lower, with Utilities the worst performers, followed by Energy stocks.

Technically, the SP500 is holding above key support at 5,770, which was previously the all-time high resistance. It has also held below the most recent all-time high at 5,870, which is now acting as the resistance target to the upside. Should 5,770 support break, we could see a move back towards 5,670.

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