The XJO is expected to open higher once again this morning with the U.S showing overnight that they are happy to hold gains after making fresh all-time highs recently. Their futures are flat.

Optimism has clearly returned to our market, with three days in a row of decent rallies. With our expected green open once again this morning, it seems likely we continue playing catch up to the U.S during our session today. Of course, we would need to see U.S futures hold ground.

Our banks are leading the charge higher, and the materials look like they have finally bottomed out and ready to join the party. Iron ore has had a tumultuous rise higher from its lows, and we have seen some key miners start to price that in.

We should test key resistance at 7,550 on open, and if we manage to push through, then there is little standing in the way to retesting all-time highs at just above 7,600. However, if the U.S shows weakness and we start to profit take, 7,500 to 7,450 are the next key levels of support.

US Markets

US shares closed mostly higher overnight, with the SP500 and NASDAQ recording small gains, while the DOW JONES finished slightly lower. Movements were small, and there was a lack of major economic data. Earnings overnight was fairly mixed, with Johnson & Johnson falling after a disappointing result, while Procter & Gamble jumped. After market we also saw Netflix report, which sent the share strongly higher in aftermarket trading. Tonight we will see some US PMI readings, which is a measure of economic activity. However, we wont see any major US data until Friday morning, when GDP and some pricing data is announced. The major test for US markets in the near future won’t be until Tuesday and Wednesday next week however, which is when the Federal Reserve will meet for their January meeting. The ‘Fed’ is unlikely to change rates and instead investors will look for clues around future rate cuts in 2024.

Seven of the eleven sector groups of the SP500 closed higher overnight, with Staples stocks the strongest performers, followed by Communications stocks. Real Estate stocks saw the most selling.

Technically, the SP500 broke above the key 4,800 level on Friday, which was the all-time high resistance level. With this break higher, the index has continued to grind a little bit further higher, although the momentum has definitely slowed – though its hard to say where this move might stall. Should the index fall from here, the 4,800 level could act as support against any selling.

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