US shares stall, XJO to continue monster run

The XJO is expected to edge higher on open this morning following a flat night of trading in the U.S. Their futures are also flat.

Yesterday our RBA kept interest rates unchanged at 4.35%, however Bullock in her statement was about as dovish as she could be given the current environment of sticky inflation and economic data. The market reacted surprisingly well to the news and managed to break through 7,750 resistance to sit just shy of 7,800. This morning, we are showing a willingness to hold the extended gains from yesterday, with an expected open just above 7,800.

U.S futures are flat, and so without direction from them at this stage it would be hard to expect too much from our market today given how strongly we have rallied the past few sessions. Indeed, we are looking at overbought territory in the short-term. It seems reasonable to expect profit taking soon, however we may see the next key resistance at 7,850 or our all-time highs at roughly 7,900 before we do. Of course, we are still beholden to how the U.S trades, but for now we will be more likely to join in the rallies, and perhaps a little more reluctant to price in their falls.

US Markets

US shares stalled overnight, with each of the three major indices closing flat. US markets have jumped across the past four sessions, with renewed optimism around the potential for US rate cuts is driving US markets higher. Many are now predicting that the Fed will cut interest rates in September, which is a carrot dangling in front of the market. There was a lack of major US economic data overnight, and this will be a quiet week for US data in general. There is some US company earnings reporting however, which so far has been mostly positive. It was perhaps more mixed overnight, with Disney falling strongly after missing revenue forecasts, while UBS jumped after beating its expected results.

Eight of the eleven sector groups of the SP500 closed higher overnight, with Materials the strongest performers, followed by Utilities, Staples, and Real Estate. Discretionary stocks saw the most selling, followed by Technology stocks.

Technically, the SP500 has been rising after breaking above the medium term downtrend line on Friday night. The the index rose to the next potential resistance level at the 5,200 level overnight, which it stalled at and held below. Should the index rise through 5,200, we could see a move back to the all-time highs. Should the index fall from here, the recent low around 5,000 is likely the support level to the downside.

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