The XJO is expected to open higher this morning following a continued rally in the U.S overnight and their positive futures this morning.

Yesterday our cowardly market was unable to hold onto the opening gains, finishing only marginally higher. It was good to see that we tried to push through 7,200, and this morning we should feel validated in doing trying again, now that we have seen the U.S commit to fresh new yearly highs.

Our meek gains yesterday may be put down to how big a week we have for reporting. Tonight, we have U.S CPI and on Thursday night we have a Fed interest rate decision and Powell will comment on the current monetary policy environment and provide future guidance. Our market may simply not be willing to make too many gains heading into such a important releases.

US Markets

US shares closed higher again overnight, with each of the three major indices again finishing in the green. This led to a new yearly high being recorded on the SP500, while the NASDAQ and DOW JONES returned to their yearly highs. Movements and volumes were small however, so prices instead drifted higher with the current bullish momentum. Share trading has been a little subdued ahead of the major events of the next two days. The first of these will be the US CPI reading, which will be release tonight. Investors want to see CPI (inflation) continue to fall, which would be a sign that interest rates won’t go any higher and that they could eventually be cut. The next major event will be Wednesday night’s Federal Reserve meeting, which is unlikely to see a change in rates, but which will inform the market on the likely path of rates moving forward.

Ten of the eleven sector groups of the SP500 closed higher overnight, with Consumer Staples, Industrials, and Materials the strongest performers. Communications stocks were the only ones to close lower on average.

Technically, the SP500 has been slowly grinding through the key 4,600 resistance level, which is the highest level for the year. Should we see a clear break above 4,600, that would indicate further gains, while with a break lower we would be looking for a higher trough on the current uptrend.

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