US shares close mostly lower, XJO to rise ahead of key CPI data

The XJO is expected to rally on open this morning despite a small pullback in the U.S overnight. U.S futures are in the red.

Yesterday we bounced off key support at roughly 7,900 intraday to retake over half the day’s losses. This morning we should open near 8,000.

We seem to be hanging around these levels as we head into some important reporting. Today we have local CPI at 11:30am (AEST). We also have RIO reporting earnings. Next week we should head into earnings season in earnest.

Roughly 7,900 to 7,850 remains key support, and roughly 8,050 to 8,075 remains key resistance. If CPI surprises today we could go on to test either.

US Markets

US shares closed mixed overnight, with the DOW JONES closing higher, while the SP500 and NASDAQ closed lower. US shares were dragged lower by selling in technology stocks and after US markets closed, futures were pushed further lower by a somewhat disappointing earnings result from Microsoft. Tonight we will see the results of the US Federal Reserve meeting for July and though the Fed is unlikely to change rates at this meeting, they are expected to indicate whether they will cut rates in September. The market is expecting cuts in September, so confirmation of this could trigger positivity, though if the Fed wavers we are likely to see strong selling.

Seven of the eleven sector groups of the SP500 closed higher overnight, with Energy the strongest performer, followed by Financials stocks. Technology stocks saw the most selling.

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