Dow Jones Retreats as Yields Fall, Regulatory Danger Weighs on Grasp Seng Index

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

• Dow Jones, S&P 500 and Nasdaq 100 indexes closed -0.60%, -0.20% and +0.40% respectively
• The tech sector outperformed cyclical ones because the Treasury yield curve flattened on development considerations
• Hong Kong’s tech shares are beneath mounting regulatory stress. Didi Chuxing plunged 19.5%.

Dow Pullback, Yield Curve, Grasp Seng Tech, FOMC Minutes, Asia-Pacific at Open:

The Dow Jones Industrial Common pulled again from document ranges on Tuesday because the Delta variant stoked renewed considerations concerning the restoration of world financial system. 10-year Treasury yield plunged 6%, or 8.7bps to a 4-month low of 1.35%, reflecting rising development considerations. In the meantime, 2-year fee fell 2.5%, or 0.57bps in a single day, leading to a flattening yield curve.

The expertise sector tends to outperform the cyclical ones when yield curve flattens, as a result of falling longer-dated charges could bolster their valuations and attraction. A 4.7% surge in Amazon’s share worth despatched the Nasdaq 100 index to a contemporary document.

The Delta variant was attributed to the current surge in Covid-19 instances within the UK and Australia, and should threaten a brand new spherical of lockdowns and journey restrictions world wide. This will solid a shadow over a fragile and unbalanced restoration of the worldwide financial system, particularly to nations which have comparatively gradual vaccination progress. A worsening pandemic state of affairs could profit the expertise sector, which tends to outperform cyclical ones through the depth of the pandemic.

Nasdaq 100 Outperforms Dow Jones

The US Greenback index rebounded to 92.5 in a single day as souring sentiment boosted demand for the safe-haven foreign money. This exerted downward pressures on treasured metals and crude oil costs. Gold costs pulled again to $1,795 after briefly hitting a two-week excessive of $1,815. Crude oil costs plunged 3.3% to $73.7 as merchants mulled uncertainties surrounding OPEC+ output coverage after the conferences hit a impasse.

Wanting forward, the June FOMC assembly minutes dominates the financial docket right this moment alongside MBA mortgage functions. Traders will eye particulars of the Fed’s view on macroeconomic situations – each inflation and the labor market – for clues about its tapering timeline.Discover out extra from DailyFX financial calendar.

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

Hong Kong’s Grasp Seng Index (HSI) fell for a sixth day after Chinese language cybersecurity regulators tightened controls over tech corporations on security and privateness floor. The Our on-line world Administration of China (CAC) launched a probe into Didi Chuxing – the nation’s largest ride-haling – on Friday after which ordered app shops to take away it on Sunday. Didi was listed in New York alternate simply final week, and its share worth plunged nearly 20% after the information. Beijing’s tightening grip on web corporations could proceed to weigh on sentiment amongst Chinese language tech corporations listed in each Hong Kong and the US.

Wanting again to Tuesday’s shut, Eight out of 9 Dow Jones sectors ended decrease, with 73.3% of the index’s constituents closing within the crimson. Supplies (-2.49%), power (-1.96%) and communication companies (-1.48%) had been among the many worst performer, whereas data expertise (+0.23%) registered a small achieve.

Dow Jones Sector Efficiency 06-07-2021

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 possible intensify near-term shopping for stress and open the door for additional upside potential. A failed strive nonetheless, could type a “Triple Prime” chart patten that’s bearish in nature. Bearish MACD divergence means that costs could also be weak to a technical correction as bullish momentum fades.

Dow Jones Index – Every day Chart

Grasp Seng Index Technical Evaluation:

The Grasp Seng Index is hitting the ground of the range-bound zone it traded inside over the previous couple of months. Holding above this degree could pave the best way for a technical rebound, whereas a breakdown under it might open the door for additional losses. The MACD indicator is oscillating at across the impartial line, suggesting that the index could also be lack of a transparent course within the close to time period.

Grasp Seng Index – Every day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index pulled again from its all-time highs this week and entered a technical correction. Costs have possible shaped a “Bull Flag” sample, which hints at additional upside potential after a interval of consolidation. Speedy assist ranges might be discovered at 7,200 – the 127.2% Fibonacci extension. The general bullish pattern stays intact as steered 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