ASX 200 and Nikkei 225 Weak to Additional Declines as US Shares Tumble

ASX 200, NIKKEI 225 INDEX OUTLOOK:

• All three main US indices tumbled over 3% on virus resurgence and lockdown considerations
• VIX Volatility Index soared to a six-week excessive amid souring sentiment, the US Greenback Index climbed
• ASX 200 and Nikkei 225 index faces intense promoting stress as a result of exterior headwinds

ASX 200 Index Outlook:

Australia’s ASX 200 index opened 1.7% decrease on Thursday, following a broad selloff within the US fairness markets in a single day. France imposed a nationwide lockdown and Germany is prone to put stricter social distancing measures in view of a fast improve in coronavirus circumstances throughout the area. Hospital capability is among the high considerations. Threat sentiment may stay downbeat till a transparent tipping level is noticed within the virus pattern or an efficient vaccine is developed and turns into accessible to the general public.

The VIX Volatility Index, which is perceived as a gauge of market concern, has soared to 35.zero from 31.eight in a single day – see IG chart under. This marks the best degree of fairness market volatility noticed since early September. The volatility is prone to keep at elevated ranges by way of subsequent week’s US election, which is one other main occasion threat.

Wall Road continued to ship upbeat Q3 earnings, which have been considerably offset by overwhelming virus considerations. 36 out of 41 S&P 500 index constituents, which unfolded Q3 outcomes on October 28th, have crushed analysts’ forecasts by way of their earnings per share (EPS). To date within the earnings season, greater than 80% of main US firms have delivered better-than-expected outcomes.

VIX Volatility Index – Each day

Supply: IG

Asia-Pacific markets are set to commerce broadly decrease following US and European leads, however could undergo to a lesser prolong as a result of comparatively better-managed virus conditions within the area. Crude oil costs slumped Four days in a row, weighed by virus considerations and a a lot higher-than-expected rise in US crude stockpiles. In line with EIA reviews, US crude oil stock climbed by 4.32 million barrels within the week ending October 23rd, a lot larger than a 1.23 million forecast. Falling crude oil costs could exert downward stress on the vitality sector and commodity-linked currencies just like the Canadian Greenback and the Norwegian Krone.

On the macro entrance, the BOJ and ECB will each announce rate of interest choices and provides ahead steering on their financial coverage right this moment. US Q3 superior GDP studying will likely be in focus too. Discover out extra on our financial calendar.

Technically, the ASX 200 index has possible entered right into a technical correction. It broke down the 20-, 50- and 100-Day Easy Transferring Common (SMA) strains this week, suggesting that downward stress is prevailing. A direct help degree may be discovered at 5,800 – the 50% Fibonacci retracement (chart under).

The MACD indicator shaped a “Demise Cross” and costs have been trending decrease since, displaying sturdy bearish momentum. The index worth has hit the decrease Bollinger Band and pierced by way of it, signaling sturdy promoting stress within the close to time period.

ASX 200 Index – Each day Chart

Nikkei 225 Index Outlook:

Technically, the Nikkei 225 index has possible entered a technical correction with an instantaneous help degree discovered at 23,000 – the 100-Day SMA line (chart under). The index has possible damaged underneath a “Rising Wedge” which has been forming since June, and thus has opened the room for additional draw back. Breaking under 23,000 help could sign additional losses with an eye fixed on 22,700 after which a significant help degree at 21,690 – the 23.6% Fibonacci retracement.

Nikkei 225 Index – Each day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Feedback part under or @margaretyjy on Twitter