The XJO is expected to open lower this morning following a continued pullback in the U.S overnight. Their futures are flat.
Falls overnight were largely driven by tech. Their Financials even finished a good measure in the green, and their Materials were relatively flat. So why are we seeing selling this morning in response?
Well our market was likely hoping the U.S would follow through on what their positive futures were promising yesterday. But alas, they did not. Indeed, in anticipation, our market reversed from intraday lows near 8,200, rallying almost 90 points to finish in the green. Without the follow through overnight, it isn’t surprising to see our market give up some of yesterday’s optimistic gains.
Our expected open at this stage is roughly 8,250. U.S futures have edged into the green, and if they remain so, our market find the courage to soften some of the opening losses.
The lows of yesterday helped confirm that the key support is roughly 8,200. There is also interim support at 8,250, and key levels at 8,150 and 8100. 8,050 is the bottom of our market – a line it has not crossed since clearing it back in September. 8,100 is also where the 200 day MA comes in. This is the most logical target for our market in the short-term, though of course this seems only likely if the U.S continues to fall. Otherwise, 8,350 and a return to the 50 day MA seems on the books if we do get a small relief rally.
It is hard to know what to be optimistic about, and it seems markets are waking up to that. This may not be the beginning of a correction, or a bear market, but there are plenty of reasons for it to be. The Bears have a lot going for them, but the Bulls have the almighty liquidity on their side.
US Markets
US shares closed lower again overnight, with sentiment souring in technology shares ahead of a key earnings report from NVIDIA tonight. Also denting sentiment at the end of the session, was comments from President Trump that tariffs against Canada and Mexico “would go ahead” after being paused for the past month. This will be a fairly quiet week for US economic data, at least until US GDP is reported on Friday morning Australian time. Instead, the market is likely to focus on Trump and the actions of his government, which so far haven’t been great for markets. Further tariff announcements are likely to be met with selling, as will Trump’s cosying up to Putin.
Five of the eleven sector groups of the SP500 closed higher overnight, with Healthcare and Financials the strongest performers. Technology and Discretionary stocks saw the most selling.
Technically, the SP500 broke below the support level at 6,000 points overnight, which is a bearish sign. This puts the index roughly where the longer-term uptrend line sits. With a break lower, we could see a move back towards 5,870 index points. However, we would first need to see a break of the trend line.
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