Weaker than expected US jobs openings gives markets hope on inflation

The XJO is expected to open flat this morning despite both the U.S rallying last night and their marginally positive futures.

Our muted open may be chalked up to our strong day yesterday pricing in their move last night which was indicated by their futures during our session. It may also simply be that our market recognizes that the U.S has hit resistance and doesn’t believe there is more gains to be had in the immediate term. It seems reasonable to expect some profit taking.

Yesterday, our opening gains were bolstered by lower than expected mean weighted CPI. With poor consumer confidence and JOLTs numbers from the U.S, the bulls have driven markets higher in the belief that central banks will have less reason to hold a higher-for-longer stance.

Yesterday we also held our own key resistance at roughly 7,300. We tried to push through, but we clearly didn’t want to get too ahead of ourselves. It seems likely to be a subdued market today if U.S futures stay firmly in the green. Otherwise, our market may take some profit and move back to the safety of the moving averages at roughly 7,250 if we get any sniff of profit taking from the U.S.

US Markets

US shares closed slightly higher overnight, with each of the three major indices finishing in the green. Movements were relatively small, and they were supported by mostly worse than expected economic data, with the US second quarter GDP revision coming in lower than expected, while another reading of jobs created also came in lower than expected. On the flip side, there was a massive drawdown in US oil inventories. With data starting to weaken this week, investors have started to lower the likelihood of more interest rate rises from the Federal Reserve, something that is a huge benefit to shares. Shares are definitely enjoying some bullish momentum, but after four days of strong gains, that momentum may now be starting to slow.

Nine of the eleven sector groups of the SP500 closed higher overnight, with only Utilities closing notably lower. Technology stocks saw the strongest gains, while most other sectors were fairly flat.

Technically, the SP500 recently broke above the resistance around 4,450 and it has also broken above the short-term downtrend line. Overnight the index stalled at the next potential resistance at 4,525, and pulled back slightly. Should that level break, 4,600 would be the next target. To the downside, 4,450 is now likely to act as support.

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