Dow Jones, Hang Seng, WTI Crude Oil, Energy Stocks, NFPs, Technical Analysis – Asia Pacific Indices Briefing
- Dow Jones gains as near one-month high WTI price boosts the energy sector
- APAC markets may mark time as all eyes turn to US non-farm payrolls data
- Hang Seng Index confirms a breakout above a near-term falling trendline
Thursday’s Wall Street Trading Session Recap
Cyclical stocks outperformed the broader market on Thursday, propelling the Dow Jones Industrial Average as it closed 0.37% higher. The S&P 500 rose 0.28% while the tech-heavy Nasdaq Composite gained just 0.14%. Within the S&P 500, the energy, health care and industrial sectors pulled ahead by 2.53%, 1.08% and 1.02% respectively. Communication services (-0.70%) and consumer discretionary (-0.07%) lagged behind.
The highest close in WTI crude oil prices in almost one month likely benefited energy stocks. Investors continued digesting the aftermath of this week’s OPEC+ meeting where members kept oil production steady, remaining reluctant to increase output towards pre-pandemic levels. Meanwhile, natural disasters in the US, such as Hurricane Ida and flooding in New Jersey, likely fomented supply constraint woes.
Dow Jones Technical Analysis
Despite gains in Dow Jones futures, the index remains slightly off current all-time highs in early August. Prices seem to be trading within the boundaries of a bearish Rising Wedge chart pattern. While the outlook remains bullish within the boundaries of the formation, a breakout to the downside could hint at a material turn lower. This is as negative RSI divergence continues to show fading upside momentum.
Dow Jones Futures – Daily Chart
Friday’s Asia Pacific Trading Session
Gains on Wall Street may precede a rosy tone for Asia-Pacific stock markets. The top-tier event risk will likely be Caixin Chinese composite and services PMIs. Still, the focus for global markets likely remains on Friday’s US non-farm payrolls report. This follows last week’s Fed Economic Policy symposium at Jackson Hole. There, Chair Jerome Powell seemed to raise a cautiously dovish tone about the labor market.
This means that persistent disappointment in NFP data could further cool hawkish Fed policy expectations, opening the door to rosy market sentiment. Earlier this week, a softer ADP private payrolls report may have skewed investors towards anticipating a similarly disappointing NFP report. As such, perhaps an in-line or even slightly softer outcome may catch traders off guard. With that in mind, APAC indices like the Hang Seng Index, ASX 200 and Nikkei 225 could mark time until that key event risk passes.
Hang Seng Technical Analysis
Hang Seng Index futures confirmed a breakout above a near-term falling trendline from June. That may open the door to shifting the near-term technical outlook bullish. Still, key resistance remains at 26735, which is where the 50-day Simple Moving Average (SMA) is currently sitting. Clearing these points may further reinforce a bullish trading bias.
Hang Seng Futures – Daily Chart
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter