NASDAQ 100, HANG SENG INDEX, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 indexes closed +1.76%, +1.40% and +0.62% respectively
- Cyclical-linked energy, financials and industrial sectors underperformed as inflation fears abated
- Futures in Japan and Australia are edging higher, leading a rebound among APAC markets
Nasdaq 100, Powell’s Comment, USD, Bitcoin, Asia-Pacific at Open:
Wall Street stocks rebounded strongly on Monday after Fed Chair Jerome Powell’s written comments boosted market confidence. He said inflation had picked up but should move back to the central bank’s long-term target of 2 percent once supply imbalances resolve. It suggests that the recent spike in inflation may be “transitory” and thus the Fed may be patient in raising interest rates. Powell’s dovish stance helped to alleviate market fears about tapering after St. Louis Fed President James Bullard hinted that rate hikes may start as soon as in the end of 2022 during a TV interview on Friday.
All 11 S&P 500 sectors ended higher, with reflation-linked energy (+4.29%), financials (+2.35%) and industrials (+2.21%) outperforming. The Nasdaq 100 index closed a hair below its all-time high of 14,163, lifted by large-cap stocks such as ASML (+1.43%), Alphabet (+1.42%) and Apple (+1.41%). The upcoming earnings season could provide the stock market another boost as analysts forecasted a solid period of earnings growth. This may pave the way for Nasdaq 100 to attempt higher highs in the weeks to come.
Source: Bloomberg, DailyFX
The DXY US Dollar index pulled back 0.5% from a two-month high overnight, alleviating pressure on commodities and sending crude oil prices to their highest levels seen since October 2018. Strong crude oil prices may bolster the appeal of commodity-linked currencies such as the Canadian Dollar and Norwegian Krone. Gold prices also rebounded mildly, but the overall trend appears to have tilted to the downside after the recent selloff.
Bitcoin fell more than 11% over the last 24 hours to the 31k area after Chinese authorities tightened restrictions in mining the digital token. Many Bitcoin mines were closed in the Sichuan province over the weekend amid an intensified crackdown against the cryptocurrency. More than 90% of the country’s mining capacity will be shut down in the near term, which may have a significant impact on prices as China accounts for around 70% of the world’s Bitcoin mining capacity.
Asia-Pacific markets look set to trade higher today. Futures in Japan, Australia, Hong Kong, Taiwan, Singapore and India are in the green, whereas those in mainland China, South Korea and Malaysia are in the red.
Hong Kong’s Hang Seng Index (HSI) underperformed regional peers recently after President Joe Biden banned investment in a widened list of 59 Chinese companies with alleged ties to the defense or surveillance technology sectors. Alibaba and Tencent ADRs fell 0.58% and 1.80% respectively overnight, trading at small discounts to their Hong Kong listings. This suggest that financials stocks may outperform technology ones today.
Australia’s ASX 200 index opened 0.66%, led by financials (+1.08%), materials (+0.98%), utilities (+0.77%) and information technology (+0.54%) sectors. The index may further benefit from a rebound in metal prices as the US Dollar retreated from a two-month high.
Nasdaq 100 IndexTechnical Analysis
The Nasdaq 100 index breached a key resistance level of 14,013 and thus opened the door for further upside potential. Prices may aim higher highs in the days to come as the overall trend remains bullish-biased. The previous resistance has now become an immediate support. The MACD indicator is trending higher, suggesting that upward momentum is prevailing.
Nasdaq 100 Index– Daily Chart
Hang Seng Index Technical Analysis:
The Hang Seng Index failed to breach the neckline of the “Double Bottom” pattern and has since entered a technical pullback. Prices may continue to range bound between 28,300 and 29,350 waiting for fresh catalyst. The MACD indicator is trending lower, suggesting that momentum may be tilted to the downside.
Hang Seng Index – Daily Chart
ASX 200 Index Technical Analysis:
The ASX 200 index pulled back from its all-time highs this week and entered a technical correction. Immediate support levels can be found at the 20-day SMA line (7,234) and then 7,200 – the 127.2% Fibonacci extension. The overall bullish trend remains intact as suggested by the upward-sloped SMA lines. The MACD oscillator formed a bearish crossover however, suggesting that bullish momentum may be fading.
ASX 200 Index – Daily Chart
— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter