The XJO is expected to open lower this morning despite the U.S having a small rally overnight. Their market stalled at resistance whereas our market sort of jumped the gun yesterday, smashing into fresh highs.
We should open near 8,250 which was the previous key resistance. It seems likely we flirt with it today.
Part of the reason for our rally yesterday was likely due to our miners continuing their ascent, and some strength returning to our banks. When both sectors rally, it is hard for our broader index not to. Even though we typically prefer to follow the U.S, action in our two largest sectors is causing volatility and for our market to act out.
US Markets
US shares closed higher overnight, rebounding from earlier losses after a speech from Fed Chair Powell where he stated that “This is not a committee that feels like it’s in a hurry to cut rates quickly,” this was seen as suggesting that the economy is not headed towards recession any time soon, which for an economy most concerned about a downturn (and not too concerned about a rebound in inflation) is what they wanted to hear. Elsewhere, parts of southern states have been devastated by Hurricane Helene, which is emerging as a humanitarian tragedy and which could affect markets in the coming sessions. US shares are currently looking fairly elevated, and haven’t advanced too much since the surprisingly large 50bp rate cut last month; most likely the market is drifting as it awaits further economic data and company earnings reporting to decide on whether the next leg is higher or lower from here.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Energy the strongest performer, followed by Communications and Real Estate stocks. Materials were the weakest performers.
Technically, the SP500 is trading in all-time high territory and its hard to say where it may stall. Over the past few sessions, the index has been unable to set a daily high above 5,770, which could prove to be a resistance point in the short-term. Should the index fall from here, the previous all-time high around 5,670 should act as support.
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