The XJO is expected to open higher following a strong rebound in the U.S overnight. Their futures are flat this morning.

The rebound is likely built simply on oversold conditions attracting bargain chasers, and so it is hard to suggest it will be anything but a relief rally with a finite life. We will test 6,800 on open, however unless U.S futures push into the green during out session today, it would be hard to expect too much more. Indeed, if U.S futures move into the red in any decent measure, we may find our market does most the days rally on open.

It would be hard to expect too much directional movement between now and the U.S interest rate decision early Thursday morning, though we may create a bit more of a higher base in which to fall from. It would be hard to expect the Fed not to be more hawkish in their future guidance, though the market is likely already pricing this in.

Overall, markets remain uncertain with bearish sentiment still underpinning them.

US Markets

US shares pushed strongly higher overnight, with each of the three major indices taking a big leg into the green. US shares likely pushed higher as the Israel-Palestine conflict didn’t escalate as much as US investors had assumed on Friday. Though the situation is undoubtedly very negative, many investors were worried that an Israeli ground invasion could have dragged additional groups into the conflict – this doesn’t appear to have been the case. There was a lack of major US economic data overnight, but data from Spain and Germany did show slower than expected inflation growth, which may have also boosted US markets. Tonight we will see the full European CPI report, which could also trigger movements in US shares. US earnings reporting will restart tonight, with many big names reporting earnings over the coming days, there will also be a Federal Reserve meeting on Thursday, and a US unemployment report on Friday. With so much happening this week, we could see a change of market direction if the reports align.

Every sector of the SP500 closed higher overnight, with Communications, Financials, and Staples the strongest performers. Energy stocks saw the least buying after oil prices fell.

Technically, the SP500 is in an overall downwards move, with lower peaks and troughs being set, the index may have set a lower trough on Friday however at the 4,100 point level, which may now act as support. Don’t expect too much upwards movement on a potential rebound, with the previous support around 4,200 a potential resistance target.

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