The XJO is expected to open mildly lower this morning following a tumultuous night of trading in the U.S which saw their market retake earlier session losses to finish slightly in the red. Their futures are also slightly in the red.

U.S CPI came out this morning. The reaction was rather mixed, with the general sentiment still being that cuts are on the table this year, although last night’s read would indicate perhaps later than first expected. Even though the U.S reacted as well as they could to the read, and is still trading near their all-time highs, our market is reluctant to play any catch up and is indeed in the mood for some meek selling today.

It seems likely we are set to retest the key support around 7,480 that our market has been grinding along for the past week or so, whilst the U.S has move back towards their all-time highs. Our lamentation is in part due to some of our biggest miners suffering under a continued fall in the Iron Ore prices. The major banks have been doing their best to keep us elevated as our market was reluctant to let the miners drag the XJO too far away from the U.S and break support.

We will need to see how the U.S continues to digest the CPI reading before we can have any clear idea on the next general move for this market. Until then, expect continued consolidation.

US Markets

US shares closed slightly lower overnight after initially trading strongly lower, before buying back up to close fairly flat. Prices initially traded lower after US CPI growth came in stronger than expected, which initially sent bond yields strongly higher, before they also reversed to close flat. Overall, for a market that has been expecting around 6 rate cuts this year, the data is not what they would have wanted to see. It is surprising that markets bounced right back up, but it could just be that we will witness more of a delayed reaction. We are also about to enter a US company earnings reporting season, which will also be influential in deciding whether US markets continue higher from here, or whether they see a pullback. US markets have pretty much stalled out at their all time highs, with the CPI reading coming in stronger, its hard to see a break higher.

Nine of the eleven sector groups of the SP500 closed lower overnight, with Utilities stocks the worst performers, followed by Real Estate, and Financials stocks. Technology and Energy shares were the only ones to close higher on average.

Technically, the SP500 has stalled out around 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) continue to hold, we could see a double-top pattern form, which would be a bearish sign for the index.

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