The XJO is expected to open lower this morning, despite the U.S continuing the post-Trump pump and reaching all-time high resistance. All their gains came from only two sectors, Tech, and Comm. Services. Neither are well represented in our market. Conversely, Financials and Materials represent over half our market, and overnight, U.S Financials and Materials fell half to three quarters of a per cent respectively. U.S futures are also slightly in the red and uninspiring.
Yesterday we retested key resistance at 8,450, which was also the high of the previous day. Once again however, we were unable to push through, rebounding off that key resistance intraday to give up almost half of the day’s gains. This morning, we are expected to pullback to 8,400, giving up the rest of them.
8,400 is a key support level, but less pronounced. With strength in the broader U.S index, our market likely won’t feel the need to fall through 8,400 today. However, if U.S futures herald a rebound from their all-time high resistance and some warranted profit-taking tonight, it wouldn’t be too surprising to see our market back down at 8,350 key support. This was our rallying point and the previous key level of resistance our market contended with.
Overall, markets look bullish. We should expect the U.S to break into fresh highs and then possibly stall heading into the Fed interest rate decision next week. If most of that momentum is carried by tech, our market is likely to still rally, but with far less gusto. Perhaps this would translate to being carried to our previous all-time high. From there however, the future will likely be determined by the future guidance on monetary policy from Powell next week.
US Markets
US shares closed higher overnight, with prices reaching all-time high resistance levels on the SP500, before pulling back. It was a technology driven rally, with the large tech stocks again the primary drivers. There wasn’t much in the way of major US economic data overnight, and instead, prices rose with continued Trump optimism, though gains ended up a little muted. Moves are likely to be a bit muted for the rest of the week, with little data and prices at highs, though with Trump in office anything is possible.
Technically, The SP500 reached 6,100 overnight before stalling. We will need to see if this level breaks or holds before a directional move will again look likely.
Only two of the eleven sector groups of the SP500 closed higher overnight, with Technology and Communications the only gainers. Utilities fell strongly, as did Real Estate and Energy. Most sectors saw moderate selling.
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