The XJO is expected to open higher this morning following renewed buying in the U.S overnight, which saw them return to being within arms reach of their all-time highs. Their futures are flat.
Our market yesterday broke lower, perhaps anticipating a continued fall in the U.S. We are on the tail end of the holiday season, but volumes are still light and our market has been struggling to find buyers.
We are expected to follow the U.S higher this morning, opening near 7,540. This falls short compared to the U.S, which is due to our rally starting from a lower base (formed yesterday by our break lower). Considering this, we may have a bit more gas to move higher through our session, but don’t be surprised either way – with U.S futures flat, we may simply do all our dough on open.
The renewed buying shows that markets aren’t willing to give up yet, however with a key CPI reading on Thursday night, it would be hard to expect markets to get ahead of themselves and either make fresh highs or break key supports. This could easily be a double top, or a higher trough being formed in the wake for a continued uptrend.
US Markets
US shares jumped extremely strongly overnight, with each of the three major indices closing firmly in the green. In what looks like quite an odd move, US shares jumped strongly on a night where oil prices fell four percent, but where there was little other economic news. US shares were boosted by drops in government bond yields, with the 10-yr yield dropping back below 4%. Prices jumped as inflation expectations fell ahead of Friday’s inflation data, which is expected to show core inflation continuing to fall. US companies are also about to enter a reporting period, with large companies reporting from Thursday night. Data from the New York Federal Reserve showed that earnings growth and spending growth expectations also decreased slightly to their lowest recorded levels since 2021.
Ten of the eleven sector groups of the SP500 closed higher overnight, with Technology, Discretionary, and Communications stocks the strongest performers. Energy stocks were the only ones to close lower on average.
Technically, the SP500 bounced off potential support around 4,700 index points, with the index showing a bullish signal back to the recent highs (and roughly all-time highs) at 4,800 index points. That 4,800 level would be the mark to beat before further gains look likely. Should that level (or a lower level) hold, that would be seen as a bearish sign for the index.
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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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