The XJO is expected to edge higher on open this morning following a move higher in the U.S overnight. Their futures are flat.

Our market is clearly tentative heading into the U.S CPI reading. Their market has returned back to all-time high territory and flirted with the key level of resistance last night. However our market is still trading at key support, unwilling to price in the bullish move from the U.S prior to the CPI reading tomorrow night. Continued falls in iron ore pricing have also given a good reason to sell off key miners, with the materials sector having fallen roughly five per cent over the past week or so.

US Markets

US shares closed moderately higher overnight, with each of the three major indices finishing in the green. There was a lack of major news or events for markets overnight, so instead prices drifted back higher with the existing bullish momentum. Prices returned roughly to the highs of late December, so we will need to see if fresh highs are reached, or if prices top out here. There will be some key events for US markets over the next few days with US company earnings reporting starting tonight, and with a US inflation reading Friday night. The inflation reading will be the big deciding factor on whether fresh highs are reach, or whether we see a pullback from here.

Seven of the eleven sector groups of the SP500 closed higher overnight, with Communications, Technology, and Discretionary stocks faring the best. Energy stocks were the only ones to close notably lower after a build-up in US oil inventories.

Technically, the SP500 bounced off potential support around 4,700 index points on Monday, and now has bounced back up towards the all-time high resistance at 4,800 index points. That 4,800 level would be the mark to beat before further gains look likely. Should that level (or a slightly lower level) hold, that would be seen as a bearish sign for the index.

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