The XJO is expected to edge higher on open this morning following a lackluster night of trading in the U.S overnight. Their futures are in the green.
Yesterday we sold off back to the middle of the range as a point of comfort, which seems to be the status quo at the moment. What will break us out of this general malaise is hard to know, but it feels like we are being propped up by strength in the U.S and our market doesn’t need too much of an excuse to sell down. Our selling was also likely exacerbated by red U.S futures during our session yesterday, but considering they managed to hold ground overnight, our market feels comfortable retaking some of the extended losses this morning.
Powell is speaking tonight, but the big news is U.S CPI Thursday night, which could vindicate their bullishness, or end in tears if it comes in stronger than expected. It would be hard to expect much between now and then.
US Markets
US shares managed to record a small win overnight, with prices mostly fairly flat for the session. There was no major data overnight, so prices held roughly their levels from Friday. We will see a speech from Federal Reserve Chair Jerome Powell as well as speeches from other key officials tonight and these will be scoured for clues around the potential for rate cuts in the next few months. US investors seem convinced that rates will be lowered in September, and that is acting like a carrot dangling in front of the market. In general, US markets have most received what they want, but prices are extremely expensive up here; a pullback shouldn’t be unexpected.
Five of the eleven sector groups of the SP500 closed higher overnight, with Technology the strongest performer, followed by Materials stocks. Communications stocks saw the most selling, with Energy the second worst performer. Most sectors were fairly flat.
Technically, the SP500 is on an overall longer-term uptrend and it closed above the previous resistance at 5,500 last week. This suggests the buying should continue and its hard to say where it will stall. Should we see selling, the previous resistance at 5,375 is now likely to act as support; should it break, we are likely to see further selling.
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Advisor at TradersCircle and Emerald Financial
Joining the team at TradersCircle in 2011, Karo has extensive experience in both investing education and derivatives trading.
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