The XJO is expected to edge higher on open this morning following a similar move from the U.S overnight. Their market rebounded from their intraday lows to finish marginally in the green. With their futures also marginally in the green, our market will likely have a similar day.

With U.S CPI tonight, markets are pausing. It wouldn’t be surprising if our market edges lower by close today as we risk off heading into the announcement.

US Markets

US shares closed moderately higher overnight, with each of the three major indices recording small gains. US markets have jumped a fair degree since the Unemployment reading last week and the pace of gains is definitely slowing. Investors are also likely starting to wait on the sidelines ahead of tonight’s major data release: US CPI growth. CPI is taken as an analogue for inflation, so should this reading come in lower than expected, markets are likely to see renewed buying. Similarly, if inflation is higher than expected, we are likely to see global share market selling. US companies are also starting to report company earnings results, with tonight hosting some of the first large company reports. Regardless, the CPI reading is likely to be the event that dominates market movement in the short-term and decides whether prices climb higher from here, or head back down.

Three of the eleven sector groups of the SP500 closed lower overnight, with Energy stocks the weakest performers, followed by Staples stocks. Real Estate and Utilities stocks again saw the most buying.

Technically, the SP500 has been bouncing after rising off the support levels at 4,250 last week. However, the index now appears to be stalling out just below the resistance level around 4,400. It looks like the index will wait at this level to see what tonight’s CPI reading holds. Should CPI come in lower than expected, the index is likely to break above 4,400. Should CPI come in higher, the index will likely fall.

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