Dow Jones, ASX 200, Hang Seng, US NFPs, China CPI – Asia Pacific Indices Briefing
- Dow Jones outperformed the Nasdaq Composite following US NFPs
- Asia Pacific markets may see a rosy mood to start off the new week
- ASX 200 may target new all-time highs, will Hang Seng Index fall?
Friday’s Wall Street Trading Session Recap
Cyclically-oriented stocks outperformed the broader market during Friday’s Wall Street trading session. The Dow Jones Industrial Average led the charge higher, climbing 0.41% as the S&P 500 gained 0.17%. This is as the tech-heavy Nasdaq Composite underperformed, weakening 0.40%. Traders were busy digesting the latest US non-farm payrolls report, which could carry key implications for Fed monetary policy.
The country added 943k jobs in July, higher than the 870k estimate. This is as the unemployment rate shifted lower to 5.4% from 5.9% against the 5.7% consensus. Encouragingly, this is as the labor force participation rate increased to 61.7% from 61.6%. That suggested that the employment market was able to absorb the increase in workers. Average hourly earnings also surprised higher, clocking in at 4.0% y/y versus 3.9% seen.
Longer-term Treasury yields gained, hinting that investors also priced in a rosier outlook for global growth. That may in-turn drive the US central bank to taper quantitative easing sooner-than-anticipated, which a few officials touted this past week. Still, the outlook for global growth remains uncertain amid rising Covid-19 cases amid the more infectious Delta strain.
Dow Jones Technical Analysis
Dow Jones futures closed at a new high on Friday, taking out the key 34760 – 35000 resistance zone. Still, negative RSI divergence has been persisting since late April, showing that upside momentum is fading. That may precede a turn lower towards the 50- and 100-day Simple Moving Averages (SMAs). These could reinstate the dominant upside focus as the index explores new peaks.
Dow Jones Futures – Daily Chart
Monday’s Asia Pacific Trading Session
Given the mostly rosy mood on Wall Street, Asia Pacific markets may begin the week on a positive note. Futures tracking the ASX 200 towards the end of last week pointed higher alongside the rise in US stocks. Japanese markets are offline for the Mountain Day holiday. That said, a decline in tech stocks may hurt the Hang Seng Index. A notable event risk will likely come from Chinese CPI data. A softer print could increase calls for the People’s Bank of China (PBOC) to help support the economy after spending most of this year draining liquidity from the market. This is especially following the government’s crackdown on the education and technology sectors.
ASX 200 Technical Analysis
The ASX 200 is likely looking to push at a new high to start off the week, however, negative RSI divergence still seems to be persisting. That may open the door to a turn lower if upside momentum continues to fade. Immediate resistance seems to be the 61.8% Fibonacci extension at 7588. A turn lower may see prices fall to the 50-day SMA for an opportunity to reinstate the dominant upside focus.
ASX 200 Futures – Daily Chart
Hang Seng Technical Analysis
Hang Seng Index futures could be vulnerable as price struggle climb back above a former rising trendline from last year. A bearish crossover between the 50- and 100-day SMAs offers a broader downward technical bias. Further losses may place the focus back on the 78.6% Fibonacci retracement level at 24708. Otherwise, climbing back above the former trendline exposes the midpoint of the retracement at 27040.
Hang Seng Index Futures – Daily Chart
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter