Chinese language New Yr Bringing Decrease Liquidity

DOW JONES, HANG SENG, ASX 200, ASIA-PACIFIC MARKET OUTLOOK:

• Dow Jones index edged increased whereas the Nasdaq Composite retreated from document highs
• Weaker-than-expected US inflation knowledge led the US Greenback decrease, buoying commodity costs
• Asia-Pacific markets are heading into quieter buying and selling periods resulting from Chinese language New Yr Vacation

Inflation, US Greenback, Platinum, CNY Vacation, Asia-Pacific Shares Outlook:

Wall Avenue shares hovered close to document highs as Democrats moved nearer to move the US$ 1.9 trillion stimulus bundle with out Republican help. Fed Chair Jerome Powell addressed the necessity for accommodative financial coverage in a speech final evening, underscoring that the US job market is way from full restoration. His dovish stance and weaker inflation knowledge led the US Greenback decrease. The Dow Jones Industrial Common index completed 0.20% increased on reflation hopes, whereas the Nasdaq Composite retreated by 0.25%.

Asia-Pacific equities are in all probability heading right into a quieter buying and selling day as mainland bourses are closed for the Chinese language New Yr vacation and the Hong Kong Inventory Trade is buying and selling for half of a typical day. Futures throughout Japan, Hong Kong, Singapore, India are pointing to a decrease begin, whereas these in Australia, South Korea, Malaysia, Thailand are edging increased.

Australia’s ASX 200 index opened barely decrease and rapidly bounced again. Supplies (+1.47%), communication providers (+1.04%) and vitality (+0.80%) are main, whereas data expertise (-1.40%) and shopper discretionary (-0.88%) sectors are lagging.

The US Greenback Index (DXY) declined for a 3rd day after the discharge of weaker-than-expected US inflation knowledge. US core CPI, which excludes risky meals and gasoline prices, got here in at 1.4% YoY in January. That is barely under the baseline forecast of 1.5% and in addition marked a decline from December’s studying of 1.6%. The headline CPI studying superior 0.3% MoM resulting from increased gasoline costs, consistent with expectations. However, the year-on-year print nonetheless fell wanting market expectations. Tepid inflation charges mirrored the lingering influence of the pandemic, and should chorus the Federal Reserve from contemplating tapering any time quickly.

Weaker inflation readings additionally led the US Treasury yield curve to flatten barely, with the 5-, 10- and 20-year yields declining by 2.3bps, 3.3bps and three.5bps to 0.451%, 1.123% and 1.733% respectively. Decrease yields, alongside a weaker US Greenback, might proceed to help commodity costs. Platinum, a valuable metallic that can be utilized as a catalyst in gasoline cells for electrical automobiles, soared to a six-year excessive of US$ 1,251.

Chart by TradingView

Sector-wise, 6 out of 9 Dow Jones sectors climbed on Wednesday, with 60.0% of the index’s constituents closing within the inexperienced. Supplies (+1.89%), vitality (+1.72%) and healthcare (+0.74%) have been among the many greatest performing sectors, whereas industrials (-0.31%) and knowledge expertise trailed behind.

Dow Jones Sector Efficiency 10-02-2021

Supply: Bloomberg, DailyFX

S&P 500 Index Technical Evaluation:

Technically, the S&P 500 index resumed its upward trajectory after returning to the “Ascending Channel” final week. Costs continued to maneuver increased throughout the higher Bollinger band, pointing to additional upside potential. A right away resistance stage will be discovered at 3,950, the place higher Bollinger band and the ceiling intercept. A right away help stage will be discovered at 3,893 (100% Fibonacci extension).

S&P 500 Index – Each day Chart

Cling Seng Index Technical Evaluation:

The Cling Seng Index rebounded from the 50% Fibonacci retracement stage (28,060) and has since resumed its upward trajectory. The index is making an attempt to problem a key resistance stage of 30,140 (earlier excessive), breaking above this stage might open the door additional upside potential. A failed try to interrupt above the resistance stage nonetheless, might lead to a formation of “Double High” sample and a correction is prone to observe.

Cling Seng Index – Each day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index broke the ceiling of a “Vary-Sure” zone at 6,810 final week with sturdy upward momentum. 6,810 has now grew to become a key help stage, holding above which can pave approach for additional upside potential with a watch on 6,900. The general pattern stays bullish-biased as prompt by the upward-sloped SMAs and widening Bollinger band width.

ASX 200 Index – Each day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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