Dow Jones Retreats amid Development Considerations, Grasp Seng Might Pull Again

DOW JONES, HANG SENG INDEX, ASX 200 INDEX OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 indexes closed -0.28%, -0.18% and +0.02% respectively
• Cyclical sectors pulled again amid rising viral issues and softer financial information. Actual yields fell to all-time lows.
• Hong Kong’s Grasp Seng Index might retreat after rebounding 1.06% on Monday

Dow, Manufacturing PMIs, Actual Yields, Crude Oil, Asia-Pacific at Open:

The Dow Jones Industrial Common pulled again barely on Monday as buyers mulled rising Delta variant instances all over the world and a slower tempo of enlargement in China’s manufacturing sector. The NBS manufacturing PMI fell to 50.four in July from 50.9 in June, marking the slowest tempo of development in 17 months. In the meantime, US ISM manufacturing PMI eased to 59.5 from 60.6, lacking market expectations.

Weaker manufacturing information and worsening pandemic conditions reignited development issues, sending costs of 10-year Treasury notes to a 5-month excessive. Actual yields (nominal yield – inflation expectations) on 10-year Treasuries fell to a report low of -1.22%, reflecting each a slower tempo of development and rising inflation. Towards this backdrop, danger belongings could also be beneath near-term strain.

Crude oil costs, that are delicate to the power demand outlook, plunged 2.84% on Monday and prolonged decrease on Tuesday morning. In China, hundreds of thousands of individuals had been confined to their houses because the highly-contagious Delta variant was discovered in additional than 20 cities amid the biggest coronavirus outbreak in months. Efforts to stem the unfold of the virus might trace at a slower financial exercise and softer power demand within the months to return.

US 10-12 months Treasury Yield

Supply: Bloomberg, DailyFX

Wanting forward, the RBA rate of interest determination dominates the financial docket in the present day alongside US manufacturing facility orders report. Discover out extra from DailyFX financial calendar.

Asia-Pacific markets are positioned for a combined begin of the day. Futures in Japan, Australia, Hong Kong, Taiwan, Singapore and India are within the pink, whereas these in mainland China, South Korea and Thailand are within the inexperienced.

Hong Kong’s Grasp Seng Index (HSI) rallied 1.02% on Monday as buyers cheered sturdy Q2 earnings from HSBC. The Shanghai Composite surged 1.97% on Monday because the current viral resurgence in mainland China might permit the PBOC room to ease financial coverage. The each day Southbound internet outflows have shanked considerably in current days, reflecting that extra patrons have in all probability returned to Hong Kong marketplace for discount searching. Lingering regulatory dangers nevertheless, should still be on high of buyers’ thoughts.

Wanting again to Tuesday’s shut, 7 out of 9 Dow Jones sectors ended decrease, with 76.7% of the index’s constituents closing within the pink. Supplies (-1.51%), info expertise (-0.65%) and industrials (-0.52%) had been among the many worst performer, whereas financials (+0.17%) and healthcare (+0.11%) registered small beneficial properties.

Dow Jones Sector Efficiency 02-08-2021

Supply: Bloomberg, DailyFX

Dow Jones Index Technical Evaluation

The Dow Jones index is difficult a right away resistance degree at 34,920 – the 200% Fibonacci extension. A profitable try would seemingly intensify near-term shopping for strain and open the door for additional upside potential. A failed attempt nevertheless, might type a “Triple High” chart patten that’s bearish in nature. Bearish MACD divergence means that upward momentum could also be weakening.

Dow Jones Index – Day by day Chart

Grasp Seng Index Technical Evaluation:

The Grasp Seng Index broke a “Descending Triangle” sample, getting into a deep pullback. An instantaneous assist degree will be discovered at 24,850 – the 78.6% Fibonacci retracement. The general pattern stays bearish-biased as instructed by the downward-sloped SMA traces. The MACD indicator is trending decrease beneath the impartial midpoint, suggesting that bearish momentum could also be dominating.

Grasp Seng Index – Day by day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index is difficult a key resistance degree at 7,500 – the 200% Fibonacci extension. The general pattern stays bullish-biased, as instructed by the consecutive greater highs and better lows shaped over the previous few months. The MACD indicator shaped a bullish crossover and trended greater, suggesting that upward momentum is gaining traction.

ASX 200 Index – Day by day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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