The XJO is expected to rally on open this morning following a strong night of buying in the U.S overnight which saw their market make fresh all-time highs. Their market rallied on the back of softening inflation and retail sales data. Their futures have also edged into the green.
We should open near 7,800 and it seems reasonable to expect it to break today. We should also break the short-term downtrend line that has been in play since our highs at the start of April. 7,850 is the next level of resistance which we may go on to test today. Beyond that we have our all-time highs near 7,900 which we should go on to reach provided the U.S can hold strength.
US Markets
US shares jumped to fresh record highs overnight as CPI (inflation) slowed for the month of April. US retail sales overnight also came in lower than expected, which also points to a cooling economy. This data increases the chance of US rate cuts in the coming months, and indeed, US government bond yields dropped firmly overnight. Year-on-year US CPI growth slowed to its lowest level in three years, which has led some to now suggest that rate cuts will be seen in July. Overall, the data does suggest further upside for US shares, for the bullish carrot of potential interest rate cuts being dangled in front of investors.
Ten of the eleven sectors of the SP500 closed higher overnight, with Technology and Real Estate the best performers, followed by Healthcare, Utilities, and Communications. Discretionary stocks were the only ones not to rise on average.
Technically, the SP500 broke into fresh all-time highs overnight, eclipsing the previous resistance around 5,260 index points. With a break of this level, we should see further upwards movement, but its hard to say where this could stall given these levels have never been seen before. To the downside, the previous resistance around 5,260 is likely to act as support.
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Advisor at TradersCircle and Emerald Financial
Joining the team at TradersCircle in 2011, Karo has extensive experience in both investing education and derivatives trading.
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