The XJO is expected to open lower this morning following another night of selling in the U.S, which saw their market once again shed their early session gains to finish marginally in the red. Their futures have edged into the green.

During our past couple of sessions, U.S futures have heralded a rebound, but they can’t seem to hold opening gains into their close. Our market has shown a willingness to hold 7,600, but this morning we will test it again. At this stage we should expect to hold it, however if we do break lower then the next clear target is 7,550 and 7,500. There is practically a key support/resistance at every 50 point increment for our market. Equally, 7,650 and 7,700 remain key resistance.

We have been expecting a rebound in the U.S for the past couple of sessions, which has in-part helped keep our market holding 7,600. The other major reason is simply that their bull run, and now much of their falls, are being driven by tech, which is not as heavily represented in our market. Finally, a rebound in Iron ore prices and a low AUD helps our materials which represent our second largest sector. However, the U.S is showing that it is unable to hold gains, and so it is getting harder to hold onto the belief they will see dip buying in the short-term. This could lead to our market pricing in further falls, perhaps even over exaggerating like we did on Tuesday.

US Markets

US shares closed slightly lower overnight, with the SP500 and NASDAQ finishing slightly in the red, while the DOW JONES finished slightly in the green. Markets remain concerned around the continued strong US economic data, which doesn’t point to rate cuts any time soon. Overnight we saw fewer than expected US jobless claims, which also created worries about inflation. Company reporting overnight was also a bit disappointing, with TSMC and Netflix strongly lower after announcing their results. The real worry now for US markets is if interest rates have to be raised further.

Seven of the eleven sector groups of the SP500 closed higher overnight, with Communications the strongest performer, followed by Utilities stocks. Technology and Discretionary stocks saw the most selling.

Technically, the SP500 held below the key level at 5,050 index points. The index did hold above the next major level at 5,000 points. Should the index continue lower, we look likely to see a move back to the 4,940 level, which was first reached around the start of the year. Should the index bounce back from here, it would have to first break above 5,050 for further gains to look likely.

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