The XJO is expected to open higher this morning following a tumultuous night of trading in the U.S which saw their market close firmly in the green.
Our market is expected to test 7,000 on open this morning. Our meek rise can likely be attributed to both being nervous in the current climate, and that our key sectors of financials and materials are not seeing the same growth in the U.S equivalent as their broader market.
Yesterday we pulled back to finish only marginally higher, due to U.S futures going harshly in the red due to escalation in Israel. We tested 7,000 intraday and pulled back after the morning session. We should test 7,000 once again today, but with slightly red U.S futures, it doesn’t seem likely at this stage we push through.
Ultimately, the current climate is hard to read with reactions to Israel, soaring oil prices, and U.S CPI on Thursday. We should likely expect another broad consolidation range with 6,900 as the floor and possibly 7,080 as the roof.
US shares closed higher overnight, defying a lower open to rally throughout the session, and close in the green. There was a lack of major US economic data overnight, so instead prices pushed higher with the bullish momentum from Friday. US futures had dipped earlier on Monday after the attacks over the weekend, but investors regained confidence as last night’s session went on. US shares started pushing higher on Friday after unemployment came in higher than expected, potentially reducing the likelihood of future US rate rises. This narrative will be tested later this week, with the release of US CPI (inflation) data on Thursday night. Should CPI growth come in higher than expected, it could trigger renewed selling. Quarterly US company earnings reporting will also kick off this week, with the large names starting to report from Thursday night as well.
Every major sector of the SP500 closed higher overnight, with Energy stocks the strongest performers after a big jump in oil prices. Industrials stocks also fared well.
Technically, the SP500 bounced off the support levels at 4,250, with a strong bullish bar on Friday. The index is showing potential signs of bouncing from here, but overnight it stalled around the potential resistance at 4,330-4,350. Should these levels break, we are likely to see a further jump to the upside.
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