US markets whipped around as the Tech heavy NASDAQ gives back yesterday gains and the SP500 closes flat. Energy stocks led the rebound as Crude climbed back above $72US a barrel. Otherwise, it was an uneventful night. Investors will be waiting for the FED to deliver some guidance on when they expect to start tapering considering the strong economic rebound.
Overnight Base Metals took a strong hit as China continue to crack down on high commodities pricing. Gold and Silver are also off coming into the FED announcement. We are at a point where we will have to wait for the FED to see what the next move is for markets.
Markets are putting inflation fears to the side as many believe it will only be transitory. Investors are also expecting the FED to not start to taper bond buying just yet. What investors will want is either more confirmation that monetary policy will not change for a while or a clear and slow timeline for tapering. The FED will be meeting this week, so the market will react to their announcement Wednesday night.
Iron Ore has jumped again with the port price now back to $221.87 US a tonne. Iron Ore is still way above most analyst’s expectations, yet the miners are still having not traded any higher than when Iron Ore was at $180 a tonne. Watch this space between now and August reporting.
Another positive long term for Australia is the UK trade deal which will help Australians see a path forward on exports considering the tensions with China.
The XJO is expected to edge lower on open this morning following similar leads from both the U.S last night and their futures this morning. If the open this morning leads to a meek fall through our session today, it is likely that roughly 7325 holds – the top of the consolidation range we broke from yesterday. It is also roughly where the accelerated uptrend line comes in.
The charge yesterday was led by the financials, which are now trading near their resistance. The Materials yesterday stalled at their resistance and with mixed metals it may be hard for it to make strong advancements in the short term.
Markets are likely once again holding their breath for the Fed tomorrow morning which is likely to be a strong catalyst to move markets. It is starting to feel like our market is looking toppy in the short term, and the Fed announcement might be the excuse we need to retrace and take profits. 7250, 7200 and 7100 are the next targets if there are strong falls following the Fed. If markets react positively, it is hard to believe there will be an explosive rally considering we are at the top of the range, but we would expect sidewards to bullish movement to continue.
US shares closed lower overnight, with prices drifting lower but largely remaining inside the range of Monday’s movements. Many investors seem to be waiting for the US Federal Reserve meeting on Wednesday night, where they are expected to hint at the progression of US monetary policy from here.
US economic data overnight showed lower than expected retail sales for the month of May, while industrial production was stronger than expected, there was also a US oil inventory read that showed a bigger than expected drawdown in US oil inventories, which pushed oil prices higher. Energy stocks were therefore the strongest performers overnight, while Industrials stocks also rose meaningfully. Technology and Consumer stocks were the weakest performers overnight.
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