The XJO is expected to open flat this morning following a slightly higher finish for the U.S overnight. Their futures are also flat.
Yesterday we opened testing key resistance at 7,750 but managed to break through and hold our highs into the close. 7,775 – 7,800 seems to be another level of resistance which we will continue to flirt with today.
The RBA came out yesterday and essentially copy and pasted their previous statement. In essence, they will continue to monitor key macro-economic data, but if inflation doesn’t begin to cool, then rate cuts are on the table. It was surprising to see our market hold ground following the announcement, though perhaps we were just relieved that Bullock wasn’t more hawkish considering the readings we have had since the last RBA decision.
Regardless, we continue to trade in the broad channel, and the U.S continues to look bullish. If they remain so then 7,850 to 7,900 at the top of the range is the next major target.
US Markets
US shares closed flat to slightly higher overnight, with prices relatively unchanged across the three major indices. Movements were small and investors seemingly didn’t respond to the US retail sales data overnight, which showed that retail spending was worse than expected, which isn’t great for company earnings, but which does suggest that a US rate cut is becoming increasingly likely. Overnight NVIDIA overtook Microsoft to become the world’s most valuable company. Overall, US markets are extremely elevated at the moment, though they continue to be pushed higher by hopes of rate cuts (potentially beginning in September) and of extreme amounts of US government spending. US markets are closed tonight for the Juneteenth public holiday.
Eight of the eleven sector groups of the SP500 closed higher overnight, with Financials the strongest performers, followed by Technology and Industrials. Communications and Discretionary stocks saw the most selling.
Technically, the SP500 recently gapped through the previous all-time high at 5,450 which indicates further upwards movement, though its hard to say where the upwards movement will stall. A potential stalling point is 5,500, given that markets like round numbers. Should we see selling, the previous resistance at 5,375 is now likely to act as support; should it break, we are likely to see further selling.
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Sam Green is the Portfolio Manager at Emerald Financial, whilst also being an Equities and Derivatives expert for his clients at TradersCircle.
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