US shares higher again but reverse most of the gains, XJO to rise

The XJO is expected to edge higher on open this morning following a tumultuous night of trading in the U.S which saw their market give up their intraday day gains to finish flat. Their futures have edged into the green which is likely giving our market the confidence it needs to continue holding ground.

Yesterday was an indecisive day of trading, as our market is clearly uneasy with the U.S stalling, especially having just had three days of decent gains. We roughly tested 7,550, pulling back, but then regaining intraday losses into the close to finish fairly flat. This morning we should retest 7,550, and perhaps if U.S futures remain strong we can even push through, however it seems more likely we once again rebound and finish fairly flat.

Broadly speaking, the chances of a rate cut for the U.S in March seem smaller and smaller. If the U.S starts pricing that in, we should expected markets to fall. U.S data has been rather sticky if not stronger than expected of late, and if GDP follows that trend, we could see a sell down as markets price in higher for longer rates.

The market is closed tomorrow so we will have a couple of U.S sessions to react to on Monday.

US Markets

US shares managed to mostly close slightly higher again overnight, with technology stocks helping the SP500 and NASDAQ to finish in the green, while the DOW JONES closed lower. Shares did reverse fairly strongly from their intra-session highs, which could definitely be a sign that a reversal is soon. Theres plenty of data and events to come for markets across the next week, starting with US GDP tonight; this GDP reading will be influential in the markets predictions of rate cuts moving forwards. Moving past this, we will see a Federal Reserve meeting next week that will also be influential in the markets predictions of rate cuts. Given that rallies have occurred on the back of rate cut hopes, some risk does exist with these upcoming events.

Only four of the eleven sector groups of the SP500 closed higher overnight, with Energy, Communications, and Technology stocks the strongest performers. Real Estate, Utilities, and Materials were the worst performers.

Technically the SP500 has been recording all-time high closes for the past few sessions and overnight it even reached 4,900 before pulling back. That 4,900 level will be the mark to beat before further gains look likely. Should the index fall from here, the previous all-time high of 4,800 could act as support and that level would have to break before further selling looks likely.

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