The XJO is expected to edge higher on open this morning despite a continued selldown in the U.S overnight. Their futures are strongly in the green, however.
It was a nothing day yesterday, closing practically flat with little to no movement through the whole session. It seems we are firmly committed to holding the 200 and 100 day MAs as we wait and see how things unfold in the U.S. This morning, we should open near 8,170, only 20 points higher – and it would be hard to expect too much more today. Though if U.S futures remain firmly positive, our market could get back to the recent highs near 8,250. Regardless, it seems likely we continue to hang around here, give or take 100 points or so.
US Markets
US shares fell overnight with continued profit taking due to the recent run up, and an acknowledgement that the economy will continue to slow while tariffs remain in place. However, after US markets closed it was announced that Trump trade officials will meet with Chinese counterparts, and that has sent US futures strongly higher. Regardless, we do expect the US economy to head to recession unless they can strike a bunch trade deals – particularly with China. On Thursday night the next Federal Reserve meeting will be held and though no rate change is expected here, investors will be looking for any signs that the tariffs will delay rate cuts, or any sign that the FED expects a deterioration in the economy.
Only two of the eleven sector groups of the SP500 closed higher overnight, with only Utilities making notable gains. Most sectors closed lower to some degree, with Healthcare the worst performers.
Technically, despite the overnight pullback, the SP500 has now broken the downtrend line that has formed since February. This should indicate a move back to the peak of late March around 5,775, which is also where the 200-day moving average sits. However, should the index break below 5,500 without 5,775 being reached, that would be a very bearish sign.
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