The XJO is expected to open higher today following a strong night in the U.S on the back of softer than expected CPI. Their futures are flat this morning.
Keeping with current trends, the U.S continues to move higher. Whether we can continue to follow them remains to be seen. This morning we will begin to price in their large jump overnight, but we have our own headwinds to contend with that has largely kept our market trading in the broad channel.
We are expected to open near 7,800 key resistance and there is a decent chance we manage to push through by close. However, whether we can continue to extend gains in the coming days will of course come down to how the U.S continues to trade, and how our miners play out. The banks have largely been the heavy lifters for our market whilst our miners lament. However, the banks are very expensive at these levels, so if fresh highs are on the books, we likely need to see the miners come on line.
Overall, we should continue to expect the channel to hold, with 7,900 the top of the range and perhaps the next broader target. Before we get there though, we will need to contend with both 7,800 and 7,850.
US Markets
US shares closed higher overnight, with the NASDAQ and SP500 closing firmly higher at record levels. The DOW JONES was flat. The gains came after US CPI for May came in lower than expected, with CPI growth slowing faster than expected and at the slowest pace since July 2022. This was enough to send US shares higher, particularly technology stocks. However, after the CPI data, we saw the US Federal Reserve meeting for June, with the ‘FED’ pointing towards only one US rate cut this year, whereas many had still been expecting two US rate cuts. This put a dampener on the rally, and the SP500 gave up almost half of its gains. In general US markets are now pricing in a 75% chance of a rate cut from the Fed in September, and this expected rate cut is acting like a carrot dangling in front of markets and keeping them driving higher.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Technology the strongest performer, followed by Industrials. Energy stocks saw the most selling, followed by Staples stocks.
Technically, the SP500 gapped through the previous all-time high at 5,375 and continued into blue sky territory. Its hard to say where the upwards movement will stall, but overnight the index reached 5,450 before pulling back. To the downside, the previous resistance at 5,375 is now likely to act as support.
Want to learn how to trade?
The team at TradersCircle/Emerald Financial have released a free online stock market education course, click here to enrol and get started.
Advisor at TradersCircle and Emerald Financial
Joining the team at TradersCircle in 2011, Karo has extensive experience in both investing education and derivatives trading.
Latest posts by Karo Cornips (see all)
- XJO to open flat with US markets back around resistance - September 2, 2024
- US markets close lower ahead of NVIDIA report, which disappoints - August 29, 2024
- Investors take pause ahead of key NVIDIA report - August 28, 2024
Leave a Comment
You must be logged in to post a comment.