The XJO is expected to edge higher on open this morning in anticipation of an RBA rate cut this afternoon. The U.S was closed overnight, but their futures closed marginally higher.
Yesterday we opened just below 8,500 but by close had managed to retake intraday losses to finish only slightly in the red. It also seems we bounced off the underlying uptrend line which comes in around similar levels.
Our market, and many mortgage holders, are likely to be watching the RBA announcement to day at 2:30pm. The rate cut is likely already priced in, and so it will be the future guidance on monetary policy from Bullock that the market will be studying. If she is rather hawkish, suggesting that we shouldn’t expect further cuts for a while, don’t be surprised to see our market fall.
US Markets
US markets were closed overnight for the Presidents’ Day Holiday. US futures closed slightly higher. Recently US shares have stalled at resistance, with selling perhaps creeping in due to plenty of recent negative news, and uncertainty over the policies of the Trump administration. This week will be a fairly quiet one for US economic data, so the talk in the market will probably focus on Trump. US shares have had plenty of reasons to fall, but they remain near all-time highs with US government spending helping to keep them there. Regardless, they are still vulnerable to short shocks down, and don’t be surprised if we see something like that soon.
Technically, the SP500 has returned to the all-time high resistance level which sits just above 6,100. We will need to wait and see if this level holds or breaks. Should we see a break above this level, we should see further gains, though its hard to say where the target would be. To the downside, there is key support at roughly 6,000 points, which is also close to where the uptrend line comes in. This leaves the SP500 inside an ascending triangle, waiting for a directional breakout.
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