Our XJO is expected to rise around 20 points this morning to roughly 7,515 index points. This is despite a fourth night of selling in US markets, which has occurred with bond yields bouncing back up, and with investors reducing bets on the pace and number of rate cuts expected this year.

The XJO futures have been fairly resilient given this scenario, but after two sessions of local selling and the strong bullish uptrend, it is possible that the bullish momentum simply retook the initiative. Still, with bond yields pushing back up, it is possible that after some minor buying, we see some more selling and profit taking return to the market.

Our market roughly held at the first potential downside target of 7,500. If we break below this level we would start to look at 7,450 and 7,400 as the next key levels. Should we bounce back up from here, the recent highs around 7,600 are likely to act as resistance.

US Markets

Equity markets closed mostly lower overnight, with the Dow Jones flat, S&P 500 down -0.3% and NASDAQ down -0.6%.

US companies ramped up hiring in December with private payrolls increasing 164k, however, wage gains continued to cool, consistent with an outlook for sustained economic growth and diminishing inflation.

European Markets

European equity markets closed higher overnight, with the Stoxx Europe 600 up +0.7% and U.K. FTSE 100 up +0.5%.

German DAX gained +0.5%, as data revealed German inflation quickened less than anticipated in December with CPI rising +3.7% y/y (+3.8% y/y under EU harmonized).

Asian Markets

Asian equity markets closed mostly lower overnight, with both the Shanghai Composite and Hang Seng paring some intraday declines to close -0.4% lower and flat, respectively, as sentiment was boosted after China’s Minister of Finance said the government will make sure the overall size of fiscal spending increases to play a better role stimulating domestic demand.

KOSPI was down -0.8%, as a South Korean builder’s plan to restructure debt prompted a rating agency to warn of spillover risk. Nikkei 225 declined -0.5%. 

Australian Markets

The S&P/ASX 200 closed -0.4% lower yesterday, as data revealed a slowdown in Australia’s manufacturing sector continued through December, with activity contracting over the month.

WTI oil is trading at US$72.39 a barrel, as investors weighed data revealing stockpiles in Cushing rose to the highest level since July against rising tensions in the Middle East with a U.S. Admiral warning Houthi Red Sea attacks show no sign of abating.

Iron ore price is at US$133.59 per ton. 

Spot gold is trading at US$2043 per oz.

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