The XJO is expected to open lower this morning following a tentative night of trading in the U.S, continuing on their sideward consolidation. Their futures are mixed, with Nvidia boosting aftermarket trading with their positive report. BHP on the other hand fell close to five per cent as their offer for Anglo was knocked back again. This will of course feed into the BHP listed on our market. As it is our second largest stock by market cap, it is accounting for almost half of the expected falls this morning.

We should test 7,800 key support on open. Whether we hold it will likely come down to how we digest U.S futures today and how BHP fares. Sentiment remains bullish so it seems more likely than not that we hold as our move today will be more exaggerated than the U.S and we may not want to disconnect as much. If we do fail, then roughly 7,750 is the next key level for our market.

US Markets

US shares closed lower overnight after the Federal Reserve meeting minutes were released, which showed that policy makers were in no rush to cut interest rates. The release sparked renewed debate as to whether we would in fact see interest rate cuts this year. The minutes were for the Fed meeting at the start of the month however, which was before the lower-than-expected inflation reading of the past week, potentially suggesting that the ‘Fed’ could be more dovish at the next meeting. While US markets did close lower, movements were small and they didn’t close around the lows of the session, rebounding into the finish. After US markets closed, NVIDIA reported better than expected earnings results and announced a stock-split, which sent the share price 6 percent higher in after-market trading. Overall though, it will be hard for US markets to keep grinding higher with a cloud over the interest rate situation and with valuations quite stretched at these levels.

Three of the eleven sector groups of the SP500 closed higher overnight, with Healthcare the best performer, though its gains were very small. Energy stocks saw the most selling, followed by Utilities, Materials, and Real Estate stocks.

Technically, the SP500 broke into fresh all-time last Wednesday, eclipsing the previous resistance around 5,260 index points. However, the market has since failed to progress much further and has formed a new resistance at 5,320 index points. Should the index fall from here, it would have to close below 5,260 before further selling looks likely. Should the index rise from here, it would have to break above 5,320 to look bullish.

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