Dow Jones Retreats as Sentiment Sours, Will Grasp Seng Index Comply with?

DOW JONES, HANG SENG, ASX 200 INDEX OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 indexes closed -0.75%, -0.86% and -0.60% respectively
• US authorities bonds yields continued to fall, suggesting that reflation optimism could also be faltering
• Asia-Pacific markets are positioned to comply with a unfavorable lead, with most futures buying and selling within the purple

Yields, Delta Variant, Jobless Claims, Asia-Pacific at Open:

Wall Road equities pulled again from their report highs because the rising Delta variant of the Covid-19 virus casted a shadow over the outlook of worldwide restoration. All Dow Jones sectors ended decrease, with monetary, supplies and shopper discretionary sectors main the decline. 10-year Treasury yields fell to 1.294% – the bottom stage seen since February. This means that market’s view on reflation and long-term inflation could also be weakening. Rising demand for security could have additionally attributed to the rise in Treasury notice costs, sending yields decrease.

Japan’s authorities introduced on Thursday that it plans a brand new virus state of emergency stretching via the Olympics, which is able to kick off on July 23rd. This marks the most recent authorities measures to include the unfold of the extremely contagious pressure.

In the meantime, weekly preliminary jobless claims knowledge fell barely in need of expectations. Some 373ok unemployment claims have been filed final week, in comparison with a 350ok estimate. The earlier week’s determine was revised as much as 371ok from 364ok. A slower-than-expected restoration within the labor market could serve to appease tapering fears as Fed officers monitor each inflation and employment figures to set financial coverage.

US 10-Yr Treasury Yield

Asia-Pacific markets look set to finish the week on the again foot. Futures in Japan, mainland China, Australia, South Korea, Taiwan, Malaysia, India and Thailand are within the purple, whereas these in Hong Kong and Singapore are barely greater.

Hong Kong’s Grasp Seng Index (HSI) tumbled 2.89% on Thursday, placing it on the verge of wiping out the complete year-to-date good points. Sentiment deteriorated after Chinese language regulators introduced new antitrust guidelines on Thursday following ordering app shops to take away Didi Chuxing earlier this week. An abrupt tightening in regulatory curbs on the nation’s massive tech companies harm investor confidence, resulting in a pointy fall within the shares similar to Tencent (-3.7%), Alibaba (-4.1%), Meituan (-6.4%) and JD.COM (-3.6%). Close to-term outlook could stay bearish-biased as promoting stress doesn’t seem to have depleted.

Wanting again to Thursday’s shut, all 9 Dow Jones sectors ended decrease, with 86.7% of the index’s constituents closing within the purple. Financials (-2.19%), supplies (-1.35%) and shopper discretionary (-0.87%) have been among the many worst performers.

Dow Jones Sector Efficiency 08-07-2021

Supply: Bloomberg, DailyFX

Dow Jones Index Technical Evaluation

The Dow Jones index has doubtless shaped a “Triple High” chart sample after costs did not breach a key resistance stage at 34,920 for an additional strive. A deeper pullback from right here dangers breaking the “Ascending Channel” that shaped since November, and should open the door for additional losses towards 33,320 – the 161.8% Fibonacci extension.

Dow Jones Index – Every day Chart

Grasp Seng Index Technical Evaluation:

The Grasp Seng Index broke the ascending trendline as highlighted on the chart under and thus opened the door for additional losses. A right away help stage could be discovered at 27,150 – the 50% Fibonacci retracement. The general pattern seems to be bearish-biased because the SMA strains are about to kind a “Demise Cross”. The MACD indicator pierced under the impartial line, suggesting that near-term momentum is tilted to the draw back.

Grasp Seng Index – Every day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index pulled again from its all-time highs and entered a technical correction. Costs have doubtless shaped a “Bull Flag” sample, which hints at additional upside potential after a interval of consolidation. Speedy help ranges could be discovered at 7,200 – the 127.2% Fibonacci extension. The general bullish pattern stays intact as instructed by the upward-sloped SMA strains.

ASX 200 Index – Every day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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