The XJO is expected to open lower again this morning following another night of selling in the U.S which saw their market return to recent lows but hold support. Their futures are flat at this stage.

Yesterday our market showed resilience in the face of recent selling by clawing back most intraday losses to finish fairly flat. We were bolstered by a strong Asian session and U.S futures turning from hard in the red to being in the green.

With the U.S disappointing again however, we should expect a move back to the lows of yesterday. 7,100 remains the next clear target in the short-term.

US Markets

US shares closed lower again overnight, with each of the three major indices finishing in the red. Investors’ concern remains focused on the stability of regional banking stocks, as well as the rapidly approaching US government debt ceiling, and the expected economic slowdown from the recent interest rate rises. Though all of this negativity is weighing on markets, after US markets closed Apple reported better than expected results, and its shares were trading two percent higher in after market trading. US shares do look toppy up here however, so some selling shouldn’t be too unexpected. Overnight US economic data pointed to an economic slowdown, with more jobless claims than expected, though labour costs went up, which is an inflationary signal.

Nine of the eleven sector groups of the SP500 closed lower overnight, with Financials, Energy, and Communications stocks the worst performers. Utilities and Real Estate stocks closed higher.

The SP500 closed below the recent support around 4,070 but it was unable to close below 4,050, which was an intraday level in late April. While the exact location of this support level is hard to draw, it does look like the SP500 is slowly breaking lower; this suggests should see a move back to the key 4,000 level. Should the index push back up the first upside target would be the 4,160 resistance.

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