Dow Jones Extends Positive aspects amid Tech Rout. Will Nikkei 225, ASX 200 Observe?

DOW JONES, NIKKEI 225, ASX 200 INDEX OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 closed +0.97%, -0.54%, and -2.92% respectively
• 10-Yr Treasury yield continued to edge greater, closing at a recent 12-month excessive of 1.599%
• Rising yields might weigh on the know-how sector, buoying cyclically delicate names

Reflation, Stimulus, Yields, Gold, Asia-Pacific at Open:

Wall Road equities had one other blended session as reflation hopes impressed traders to rotate out from progress and into worth names. The Dow Jones index completed up 0.97%, whereas the Nasdaq 100 index tumbled 2.92%. The know-how sector continued to underperform cyclically-sensitive ones corresponding to power, financials and shopper discretionary. Rising yields additional weighed on the tech sector, which tends to supply decrease dividend yields and thus are extra vulnerable to profit-taking exercise.

Prospects for reopening additionally inspired market members to liquidate the white-hot tech shares, which have largely outperformed in the course of the pandemic. Heavy losses had been seen among the many Nasdaq 100 index parts in a single day, with NVIDIA (-6.97%), Tesla (-5.84%) and PayPal (-5.42%) among the many worst performers.

Supply: Bloomberg, DailyFX

Breakthrough on the US stimulus packaged didn’t raise market sentiment on Monday, as Asia-Pacific markets retreated broadly amid rising longer-term Treasury yields and a resurgence within the US Greenback. The DXY US Greenback index climbed to a recent three month excessive of 92.37, pushed by safe-haven bid in addition to hopes for a quicker tempo of financial restoration within the US with recent stimulus payouts. The 10-year Treasury yield climbed 2.13% to a recent 12-month excessive of 1.599%. Towards the backdrop of a stimulus-backed reflationary theme and the Fed’s reluctance to handle rising longer-term borrowing prices, yields might proceed to nudge greater, exerting downward strain on tech shares, valuable metals and crude oil costs.

Crude oil costs retreated from a 12-month excessive after the knee-jerk response following the assault on Saudi Arabia’s oil facility light shortly. Gold costs prolonged losses to a recent 9-month low of US$ 1,683 amid a rising US Greenback and yields.

Supply: Bloomberg, DailyFX

Asia-Pacific markets look set to open in a cautiously optimistic tone, with futures throughout Japan, Australia, Hong Kong, Taiwan, Singapore Malaysia and India pointing to open mildly greater. Australia’s ASX 200 index opened up by 0.73%, led by financials (+1.33%), shopper discretionary (+1.27%) and shopper staples (+1.26%) sectors, whereas data know-how (-3.25%) lagged behind. Japan’s Nikkei 225 index opened marginally decrease amid an disappointing This fall GDP determine. Japanese This fall actual GDP studying got here in at an annualized progress fee of 11.7% YoY, decrease than the baseline forecast of 12.8%.

Trying forward, Euro space This fall GDP progress fee and German stability of commerce headline the financial docket alongside China’s Nationwide Individuals’s Congress. Discover out extra from DailyFX calendar.

Trying again to Monday’s shut, Eight out of 9 Dow Jones sectors ended greater, with 83.3% of the index’s constituents closing within the inexperienced. Communication providers (+5.17%), financials (+1.95%) and shopper discretionary (+1.42%) had been among the many finest performers, whereas data know-how (-0.51%) was a transparent drag.

Dow Jones Sector Efficiency 08-03-2021

Supply: Bloomberg, DailyFX

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Dow Jones Index Technical Evaluation

The Dow Jones indexprolonged greater inside the “Ascending Channel” shaped since early November 2020. An instantaneous resistance degree discovered at 31,916 (the 76.4% Fibonacci extension, breaking it could most likely intensify near-term shopping for strain and convey the 100% Fibonacci extension degree (32,863) into focus. The general development stays bullish-biased as urged by the upward-sloped transferring averages. The MACD indicator has shaped a bullish crossover, suggesting that near-term momentum has turned.

Dow Jones Index – Each day Chart

Nikkei 225 Index Technical Evaluation:

The Nikkei 225 index didn’t breach the 161.8% Fibonacci extension degree (30,455) and has since entered a technical correction. An instantaneous help degree will be discovered at round 28,534, the place the 50-day SMA and the 100% Fibonacci extension intercept. A day by day shut under this degree would most likely intensify near-term promoting strain and convey the subsequent key help degree of 27,870 into focus. The MACD indicator trended decrease after the formation of a bearish crossover, suggesting that near-term momentum is tilted to the draw back.

Nikkei 225 Index – Each day Chart

Chart by TradingView

ASX 200 Index Technical Evaluation:

The ASX 200 index didn’t breach the 200% Fibonacci extension degree (6,934) and has since entered a technical correction. A key help degree will be discovered at 6,730 – the 161.8% Fibonacci extension. Costs seem like consolidating inside the “Ascending Channel”, the ceiling and flooring of which can function fast help and resistance ranges respectively. The MACD indicator is trending decrease in direction of the impartial midpoint, suggesting that near-term momentum stays weak.

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