XJO to open back around 7,600 after CPI concerns and with US markets stalling

The XJO is expected to open lower this morning following a tumultuous night of trading in the U.S which saw their market retake intraday losses to finish slightly lower. Their futures are in the green.

We should open near 7,600, about one per cent lower. This is likely on the back of unease in the U.S and our stronger than expected CPI from Wednesday which we are having a delayed reaction to. Asian markets and U.S futures were strong during our Wednesday session which helped our market remain somewhat elevated, though we did give up all our intraday gains to finish flat. With the U.S showing unease over the past couple of days, our market doesn’t have a good reason to remain resilient.

7,600 is a key level of support, and with U.S futures in the green, it seems reasonable we hold it this morning. 7,500 represents our recent lows, and 7,550 is also an interim support. 7,600 is also where the 100 day MA comes in. Don’t be surprised to see our market hang around these levels, between 7,500 and 7,700 as we wait for new information to come out and develop the narrative around interest rates.

US Markets

On Wednesday night US markets closed fairly flat after rising strongly in Monday and Tuesday’s session. Trading was dominated by earnings results, with Tesla rising strongly despite a drop in revenues and earnings, while Meta (Facebook) and IBM both dropped extremely strongly after the market closed following their earnings announcements. Overnight US markets closed lower, though they opened much lower and retraced a lot of their losses by the close. After the market closed overnight we saw better than expected earnings reports from both Microsoft and Google, which sent futures markets higher after the close. Markets remain concerned around high inflation in the US, and US markets look to be in general heading lower, though strong company earnings has provided the odd day of strength.

Five of the eleven sector groups of the SP500 closed higher overnight, with Materials and Energy the strongest performers. Communications stocks saw the most selling after Meta (Facebook) dropped strongly on its earnings report.

Technically, the SP500 fell back to 5,000 points overnight and held above it, bouncing off that level as potential support. This could be a higher trough in the short-term, which could indicate a rise to at least 5,080 and perhaps higher. A potential downtrend line is forming around 5,100 and that could be the upside target for a rise.

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