US markets resume rising, XJO to open higher

The XJO is expected to open higher this morning following renewed buying in the U.S overnight. Their futures are also in the green.

Yesterday we had a strong pullback, reversing much of the past couple of session’s gains. We finished on a short-term uptrend line that has formed since the recent lows at 7,550. This morning we should bounce from it, and test resistance at 7,750. With positive U.S futures, it wouldn’t be surprising to see our market push through and move back towards the highs of yesterday at 7,800.

Without any key economic data until next Wednesday evening, coupled with a U.S market that is withing stone’s throw of their all-time highs, it seems reasonable to expect further gains in the short-term. There is just as a good an argument however, that our market continues to hang around the safety of the 50 day MA as we wait for further information.

US Markets

US shares closed higher overnight, with each of the three major indices finishing in the green. Markets continued to rise on the belief that rate cuts are once again likely this year. This was perhaps slightly solidified overnight after more jobless claims were reported than expected, a slightly deflationary signal. The next major test for the inflation and interest rate narrative will come next Wednesday for US markets, with the release of US CPI for April. This reading is expected to show a resumption of the fall in inflation and this could be a positive thing for the market, should it come in in-line or better than expected.

Ten of the eleven sector groups of the SP500 closed higher overnight, with Real Estate, Utilities, Energy, and Materials the strongest performers. Technology stocks were the only ones to close lower on average after a poor report from Airbnb.

Technically, the SP500 broke above 5,200 overnight, which is a bullish sign, perhaps suggesting a move back to the all-time high around 5,260. Should the index stall there or below that level, it would be a bearish sign, but should that level break, we will likely be seeing further upwards movement.

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