The XJO is expected to edge lower on open this morning following a U.S market which managed to retake intraday losses to finish exactly flat. Their futures are in the green.

Yesterday we saw the momentum leave, or at least pause. Our meek open this morning further confirms the consolidation as we digest the recent strong run over the past several sessions.

The hype was built on the returning narrative that rate cuts are around the corner, brought to court by Powell’s comments last week and softer than expected U.S employment data last Friday. Locally, Bulloch was about as dovish as she could have been given the current economic environment.

It seems reasonable to expect a move back towards all-time highs if optimism persists, which is only 100 points away for our market. However, it seems equally as likely to see our market retrace back to the safety of the 50 day MA which comes in between roughly 7,700 and 7,750. There is a U.S CPI reading next Wednesday night. Given the current trend of sticky inflation, markets may be weary going into it.

Regardless, we should expect key levels to hold and expect our market to continue to trade in a broad range, however come the CPI reading next Wednesday night, all bets are off.

US Markets

US shares closed flat overnight, with little change across the major indices. Prices did trade lower at points, but they recovered to close at yesterday’s finishing point. There was a lack of major US economic data overnight, and instead prices stalled after the recent push higher. Markets have renewed optimism around interest rate cuts, with the FED now expected to cut in September. Overnight US company earnings reporting was mostly negative, with Airbnb, ARM, and Uber falling following earnings results. Toyota and Anheuser Busch did close higher however. It’s a pretty quiet week for US economic data, so don’t be surprised to see prices move slowly for the next couple of sessions.

Four of the eleven sector groups of the SP500 closed higher overnight, with Utilities the strongest performer. Most other sectors closed flat, with Real Estate the weakest performer.

Technically, the SP500 has been rising after breaking above the medium term downtrend line on Friday night. The the index has stalled at the next potential resistance level at the 5,200 level. Should the index rise through 5,200, we could see a move back to the all-time highs. Should the index fall from here, the recent low around 5,000 is likely the support level to the downside.

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