Dow Jones Regular amid Tech Rout, Will ASX 200, Hold Seng Comply with?

DOW JONES, NIKKEI 225, ASX 200 INDEX OUTLOOK:

• Expertise shares plummeted, knocking down Wall Avenue benchmarks from latest highs
• Rising commodity costs bolstered the power and materials sectors, underpinning the Dow Jones index
• Hold Seng and ASX 200 opened blended as traders awaited Powell’s testimony for clues about coverage steerage

Tech Rout, Yields, Commodities, Powell Speech, Asia-Pacific at Open:

Asia-Pacific markets are poised for a cautious begin on Tuesday following a blended session from Wall Avenue. The carefully watched US 10-year Treasury yield climbed to a contemporary 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. Increased yields might have undermined the enchantment of shares, leading to profit-taking exercise within the highly-valued know-how sector particularly.

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 power (+3.46%) and materials (+2.70%) sectors, serving to the Dow Jones Industrial Common to shut marginally increased. A diverged sectoral efficiency means that traders 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 at present might be carefully 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 is likely to be troublesome to argue that the economic system stays weak and dangers are skewed to the draw back. Nonetheless, 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 properly under the Fed’s 2% goal. Nonetheless, it might be crucial to see how Powell addresses surging yields and inflation expectations, which could inhibit the central financial institution from finishing up additional easing measures.

Nasdaq Composite

Chart by TradingView

Commodity costs continued to commerce increased as market members 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 increased. WTI crude oil costs superior 5.5% in a single day, and copper costs leaped 4.17%. Agricultural merchandise together with espresso, cotton and sugar have been all buying and selling increased as properly.

The US Greenback (DXY) index retreated for a 3rd day to 90.07, falling under the 50-Day Easy Transferring Common line and hit a six-week low.

Hong Kong’s Hold Seng Index (HSI) misplaced 1.06% on Monday because the know-how sector suffered a broad selloff. With little change within the elementary floor, latest retracement could also be seen as one other technical pullback after great positive factors have been obtained over the past 4 months. The HSI is up greater than 11% yr thus far, marking it top-of-the-line performing main fairness indices throughout this era.

Australia’s ASX 200 index opened marginally increased, led by power (+2.23%), actual property (+1.11%) and industrials (+0.86%) sectors, whereas data know-how (-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 increased, with 46.7% of the index’s constituents closing within the inexperienced. Supplies (+3.46%), communication providers (+3.38%) and power (+2.70%) have been among the many finest performers, whereas shopper discretionary (-1.47%) and data know-how (-1.24%) have been trailing.

Dow Jones Sector Efficiency 22-02-2021

Supply: Bloomberg, DailyFX

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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 increased throughout the higher Bollinger Band, pointing to additional upside potential with an eye fixed on 31,910 – the 76.4% Fibonacci extension degree. The higher Bollinger Band might function a dynamic resistance degree, whereas the 20-Day Easy Transferring Common (SMA) line could also be seen as an instantaneous assist. The MACD indicator has fashioned a bearish crossover, suggesting that upward momentum is fading and a technical correction might observe.

Dow Jones Index – Day by 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 fashioned a bearish crossover as costs consolidated, hinting at bearish momentum within the close to time period. A direct assist degree might be discovered at round 30,000 (the 50.0% Fibonacci extension). Breaking under this degree will most likely result in a deeper pullback in direction of the following assist degree at 29,500 (the 38.2% Fibonacci extension).

Hold Seng Index – Day by day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index is testing the decrease certain of the “Ascending Channel” for assist as costs entered a consolidative interval. The 50-Day SMA might show to be an instantaneous assist as properly. The general development stays bullish-biased as steered by upward-sloped transferring averages. A direct resistance degree may be discovered at 6,935 (the 200% Fibonacci extension). The MACD indicator has fashioned a bearish crossover, suggesting that near-term momentum stays bearish-biased.

ASX 200 Index – Day by day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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