Chinese language Manufacturing PMI in Focus

DOW JONES, HANG SENG, ASX 200 INDEX OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.19%, +0.08% and +0.21% respectively
• US core PCE inflation knowledge got here in at 3.1% YoY, greater than a baseline forecast of two.9%
• Asia-Pacific markets look set to commerce modestly greater. US markets are shut for the Memorial Day vacation

US Core PCE, AMC Leisure, China NBS PMI, Asia-Pacific Week-Forward:

The Dow Jones index closed modestly greater on Friday because the market shrugged off greater inflation knowledge. The core PCE inflation gauge that the Fed makes use of to find out financial coverage got here in at 3.1% YoY, in comparison with a 2.9% estimate. This additionally marks the best studying since 1992, underscoring rising value stress as financial development gathers tempo.

The market doesn’t appear to be too involved about this nonetheless, because the 10-year Treasury yield declined to 1.579% whereas the DXY US Greenback index retreated again to 90.06. As long as the Fed is tolerant of a transitory spike in value ranges, greater inflation readings can in all probability be considered as a constructive signal for the economic system.

The Russell 2000 index underperformed large-cap indices as a pointy intraday reversal in share of AMC Leisure dented sentiment within the small cap shares. The inventory rallied over 110% final week amid a renewed wave of speculative exercise by Reddit day-traders. It surged as a lot as 39% on Friday earlier than pulling again sharply and closed 1.5% decrease. GameStop – one other standard inventory focused by this group of merchants – completed 12.6% decrease.

Trying forward, China’s NBS manufacturing PMI studying dominates the financial docket alongside German inflation knowledge on Monday. This week, the RBA rate of interest resolution, Euro space core inflation and US nonfarm payrolls knowledge might be in focus. Discover out extra from theDailyFX calendar.

US Core PCE Value Index (YoY)

Supply: Bloomberg, DailyFX

Asia-Pacific markets look set to kick off the week in a blended temper. Futures in Australia, Hong Kong, South Korea, Malaysia and Thailand are modestly greater, whereas these in Japan, mainland China, Taiwan, Singapore and India are within the crimson. Buying and selling exercise is prone to be muted because the US markets are shut on Monday for the Memorial Day, leading to fewer market individuals. Decrease liquidity situations could render the market vulnerable to greater volatility if sudden occasions hit the newswires.

Investors will eye as we speak’s launch of Chinese language NBS manufacturing PMI knowledge for clues in regards to the restoration of the world’s second-largest economic system. The gauge is predicted to stay in expansionary territory in Could, however upward momentum seems to be fading as a result of provide bottlenecks and rising uncooked materials prices just lately. Chinese language knowledge tends to have a major affect on the Australian and New Zealand {Dollars} as a result of their shut commerce relationship.

New Covid-19 outbreaks throughout the Asia-Pacific area could weigh on threat urge for food as extra nations tightened lockdown measures. A neighborhood in China’s Guangzhou metropolis has been put below lockdown over the weekend after a brand new coronavirus outbreak was discovered there. Malaysia will enter a “whole lockdown” all through the nation from June 1st to 14th amid rising infections. The nation’s each day case numbers exceeded 8,000 on Could 28th, reaching a brand new excessive. Final week, Japan prolonged the state of emergency in Tokyo and a number of other key areas, whereas Australia’s Victoria State imposed new restrictions.

Trying again to Friday’s shut, four out of 9 Dow Jones sectors ended greater, with 40% of the index’s constituents closing within the inexperienced. Info know-how (+1.08%) and power (+0.76%) outperformed, whereas industrials (-0.48%) and supplies (-0.35%) trailed behind.

Dow Jones Sector Efficiency 21-05-2021

Supply: Bloomberg, DailyFX

Dow Jones Index Technical Evaluation

The Dow Jones index could also be difficult the 200% Fibonacci extension degree (34,920) for a second try. Costs stay inside an “Ascending Channel” shaped since early November, the ceiling and the ground of which function key help and resistance ranges respectively. Bearish MACD divergence means that bullish momentum could also be fading nonetheless.

Dow Jones Index – Each day Chart

Cling Seng Index Technical Evaluation:

The Cling Seng Index (HSI) shaped a “Double Backside” chart sample on the each day chart and could also be positioned for additional value good points (chart beneath). The index breached above the trend-determine 100-day SMA line with upward momentum. A direct resistance degree could be discovered at 29,344 – the 50% Fibonacci retracement. Breaching above this degree could open the door for additional upside potential with an eye fixed on 29,778 – the 38.2% Fibonacci retracement.

Cling Seng Index – Each day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index reached an all-time excessive on Friday after breaching above a key resistance degree of seven,126 – the 261.8% Fibonacci extension. Costs have since opened the door for additional upside potential with an eye fixed on 7,200. The MACD indicator shaped a bullish crossover and trended greater, suggesting that upward momentum is constructing.

ASX 200 Index – Each day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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