Are markets starting to roll over?

The XJO is expected to open lower this morning following another strong night of selling in the U.S. Their futures have edged into the green, which may be part of the reason as to why our market isn’t selling off as heavily as you would typically expect following such a strong sell down in the U.S overnight.

Indeed, our market is showing an unusual level of resilience. The U.S has come off about two per cent over the past two sessions. In contracts, we finished fairly flat yesterday and are only expected to edge lower on open this morning. Admittedly though, the U.S is selling off from a higher base.

We will flirt with 7,300 once again this morning. Yesterday we dipped below it but managed to recover most of the session’s losses to finish flat. Whether we see a repeat will largely come down to how U.S futures trade during our session.

US Markets

US shares closed mostly lower overnight, with the SP500 and DOW JONES finishing in the red, though the tech-heavy NASDAQ managed to close higher after strong earnings reports from Microsoft and Alphabet. After US markets closed, Meta Platforms, which owns Facebook, rose around 11 percent in after-market trading after their better-than-expected report. In US economic news overnight, there was a big drawdown in oil inventories, which sent oil prices lower. Tonight we will see the release of US GDP, which could trigger movement in markets – investors will likely be hoping for a low GDP number, which could support the case for a pause on interest rates. This will be followed next week by the Federal Reserve interest rate decision.

Ten of the eleven sector groups of the SP500 closed lower overnight, with only Technology stocks closing higher. Tech stocks did see very strong buying, but this was contrasted with strong selling in Utilities, Industrials, and Energy stocks.

The S&P500 has now broken through the support at 4,070, suggesting that we could see a move to the 4,000-index point support level. Should the index bounce from here, the recent peak at 4,160 is likely to act a resistance.