The XJO is expected to open higher this morning despite a flat session in the U.S overnight. Their futures are also flat.
Our expected positive open may be due to a strong move higher in iron ore yesterday, with the iron ore miners rising sharply in the US. Yesterday we meekly priced in some of their rebound, and considering they managed to hold, it seems we are happy to price in a little more on open.
7,750 remains the local key support, and 7,850 remains the next key resistance which we should go on to test intraday. The short-term stochastic are moving to the oversold area, meaning the recent pullback was enough to mean-revert our market back to normality (by the very short-term).
With a U.S CPI reading on Wednesday night we should largely see sideward and indecisive movement from both our market and the U.S.
US shares closed flat overnight, with each of the three major indices seeing little change from Friday’s close. There wasn’t too much to remark on for US markets, other than perhaps that US treasury yields rose to their highest levels since November, as investors reduced bets on rate cuts moving forwards. Investors seem to be losing faith that the Fed will deliver more than three rate cuts this year, though this seemingly hasn’t effected the share market as of yet. The next major event for US shares will be the US CPI reading on Wednesday this week, which will very likely influence whether we do see three US rate cuts this year or not.
Five of the eleven sector groups of the SP500 closed higher overnight, with Real Estate and Discretionary the strongest performers. Energy saw the most selling overnight.
Technically, the SP500 is stuck around the 5,200 level, which was previously resistance and which may now be acting as support. We will need to see if the index breaks above or below this level from here. Should we see a rise from here, the first upside targe would likely be the recent peak around 5,260, while if we see selling there are potential targets at 5,150, and 5,100.
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