Markets have now shrugged off inflation worries, seeing investors pile back into equities with all sectors in the US rebounding. Crude Oil jumped back to 65.30 seeing the US energy sector the best performer on Friday.
Both the SP500 and Nasdaq are looking bullish after finding support and breaking the counter trend line. Locally the XJO is likely to hold the key 7,000 level. We have also seen strong selling in the crypto space and with the bond market quiet, we are likely to see the stock market continue to perform well.
We are now seeing strong technical signals in the US suggesting we have found the bottom of the May pullback. The Nasdaq pullback around 8.80% from it’ highs. If we see a bullish signal hold on our market and the US futures hold strength today will be a good day to go long again.
Iron Ore came tumbling back down, but the selling is nothing compared to the recent strength. Iron Ore jumped from around $180US to $233 US a tonne in less than a week. So it is only normal to see a pullback. It is unclear where the bottom of this pullback is so we need to be patient here and wait to find the bottom.
The XJO is expected to have a strong open this morning following similar leads from the U.S last night. In addition, their futures sit in the green, which means we are likely to hold our gains if they remain so during our session.
Our open this morning will have us back above the 7000 key support, putting us back in the channel range. In addition to this, our market looks to be bouncing off the key uptrend line. If it continues to hold it and move higher, we should go on to test the top of the channel at roughly 7100 again soon.
Inflation worries will remain as long as governments continue to spend and interest rates remain near zero. But analysts remain positive and bullish the market in general. Pull backs like we have seen the past few days are natural as profit taking come sin and provides opportunities for traders to get in at better levels. There may be more falls to come in the short term, but at this stage it looks like the market has stemmed the bleeding at this stage.
US shares rose on Friday, with the S&P 500 index climbing back to within striking distance of the recent all-time highs. It seems that markets were able to move past some of the recent concerns around high inflation levels, with the strongest performers on Friday being the high valuation technology stocks that had been punished the most on inflation fears.
There was a fair amount of US economic data on Friday, with retail sales, industrial production, and consumer sentiment all coming in lower than expected, which wasn’t enough to pull US markets back during the session. Technology and Energy were the strongest performing sectors on Friday, with every other major sector also closing higher to some degree.