DOW JONES, NIKKEI 225, ASX 200 INDEX OUTLOOK:
- Expertise shares plummeted, knocking down Wall Street benchmarks from current highs
- Rising commodity costs bolstered the vitality and materials sectors, underpinning the Dow Jones index
- Hold Seng and ASX 200 opened combined as buyers awaited Powell’s testimony for clues about coverage steerage
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Tech Rout, Yields, Commodities, Powell Speech, Asia-Pacific at Open:
Asia-Pacific markets are poised for a cautious begin on Tuesday following a combined session from Wall Road. The intently watched US 10-year Treasury yield climbed to a recent 12-month excessive of 1.394 earlier than pulling again to 1.367 this morning, setting a bitter tone for danger property. Yields throughout the globe are rising on inflation expectations and reflation hopes as vaccine progress and an impending fiscal stimulus package deal bolstered the chance of a post-Covid restoration. Larger yields might have undermined the attraction of shares, leading to profit-taking exercise within the highly-valued expertise sector specifically.
The Nasdaq Composite misplaced 2.46% to hit a three-week low, and the S&P 500 index was down 0.77%. Rising crude oil and metallic costs propelled a rally in vitality (+3.46%) and materials (+2.70%) sectors, serving to the Dow Jones Industrial Common to shut marginally larger. A diverged sectoral efficiency means that buyers are getting more and more cautious about tech shares’ wealthy valuations as reflation trades appeared to achieve traction.
With inflation and rising yields more and more regarding merchants, Fed Chair Jerome Powell’s testimony late right this moment can be intently eyed for any clues about future tapering. In view of encouraging vaccine progress across the globe and sturdy US retail gross sales figures in January, it could be tough to argue that the economic system stays weak and dangers are skewed to the draw back. Nevertheless, any trace about tapering could also be illusive because the job market has an extended path to realize full employment and core PCE inflation is nicely beneath the Fed’s 2% goal. Nonetheless, it might be vital to see how Powell addresses surging yields and inflation expectations, which could inhibit the central financial institution from finishing up additional easing measures.
Chart by TradingView
Commodity costs continued to commerce larger as market contributors tried to cost in rising demand for uncooked supplies because the world recovers from the pandemic. Rising commodity costs might additional strengthen the inflation outlook and lead longer-dated yields larger. WTI crude oil costs superior 5.5% in a single day, and copper prices leaped 4.17%. Agricultural merchandise together with espresso, cotton and sugar have been all buying and selling larger as nicely.
The US Dollar (DXY) index retreated for a 3rd day to 90.07, falling beneath the 50-Day Easy Shifting Common line and hit a six-week low.
Hong Kong’s Hold Seng Index (HSI) misplaced 1.06% on Monday because the expertise sector suffered a broad selloff. With little change within the basic floor, current retracement could also be seen as one other technical pullback after large positive aspects have been obtained over the past 4 months. The HSI is up greater than 11% 12 months so far, marking it the most effective performing main fairness indices throughout this era.
Australia’s ASX 200 index opened marginally larger, led by vitality (+2.23%), actual property (+1.11%) and industrials (+0.86%) sectors, whereas data expertise (-2.97%) and shopper discretionary (-1.28%) have been lagging. Japanese markets are closed for a vacation.
Wanting again to Monday’s shut, 6 out of 9 Dow Jones sectors ended larger, with 46.7% of the index’s constituents closing within the inexperienced. Supplies (+3.46%), communication providers (+3.38%) and vitality (+2.70%) have been among the many finest performers, whereas shopper discretionary (-1.47%) and knowledge expertise (-1.24%) have been trailing.
Dow Jones Sector Efficiency 22-02-2021
Supply: Bloomberg, DailyFX
( 03:02 GMT )
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Dow Jones Index Technical Evaluation
The Dow Jones index resumed its upward trajectory after returning to the “Ascending Channel”. Costs continued to maneuver larger inside the higher Bollinger Band, pointing to additional upside potential with a watch on 31,910 – the 76.4% Fibonacci extension degree. The higher Bollinger Band might function a dynamic resistance degree, whereas the 20-Day Easy Shifting Common (SMA) line could also be seen as an instantaneous help. The MACD indicator has shaped a bearish crossover, suggesting that upward momentum is fading and a technical correction might comply with.
Dow Jones Index – Each day Chart
Hold Seng Index Technical Evaluation:
The Hold Seng Index hit a robust resistance degree at 31,080 (76.4% Fibonacci retracement degree) and has since entered a consolidative interval. The MACD indicator shaped a bearish crossover as costs consolidated, hinting at bearish momentum within the close to time period. A right away help degree could possibly be discovered at round 30,000 (the 50.0% Fibonacci extension). Breaking beneath this degree will in all probability result in a deeper pullback in direction of the subsequent help degree at 29,500 (the 38.2% Fibonacci extension).
Hold Seng Index – Each day Chart
ASX 200 Index Technical Evaluation:
The ASX 200 index is testing the decrease certain of the “Ascending Channel” for help as costs entered a consolidative interval. The 50-Day SMA might show to be an instantaneous help as nicely. The general development stays bullish-biased as recommended by upward-sloped transferring averages. A right away resistance degree will be discovered at 6,935 (the 200% Fibonacci extension). The MACD indicator has shaped a bearish crossover, suggesting that near-term momentum stays bearish-biased.
ASX 200 Index – Each day Chart
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— Written by Margaret Yang, Strategist for DailyFX.com
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