FAANG Leads to Focus as Incomes Season Peaks

DOW JONES, HANG SENG, ASX 200 INDEX OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.67%, +1.09% and +1.44% respectively
• Large earnings in focus this week: Fb, Apple, Google, Microsoft, Amazon and Tesla
• The Dangle Seng and ASX 200 indexes might climb following a optimistic US lead

FAANG Earnings, Fed, BoJ, China PMI, Asia-Pacific Week-Forward:

Wall Road equities rebounded on Friday as traders shrugged off President Joe Biden’s proposal to lift capital beneficial properties taxes on wealthier People. The Dow Jones, S&P 500 and Nasdaq 100 indexes closed a hair under their document highs, boosted by strong US manufacturing PMI and new house gross sales figures. New house gross sales grew by 20.7% MoM in March to 1.02 million, marking the best degree seen since September 2006. A slew of upbeat macroeconomic knowledge underscored sturdy development momentum on the planet’s largest financial system.

The earnings season continued to ship optimistic surprises. Round 25% of S&P 500 firms reported their Q1 outcomes to this point. Amongst these, greater than 84% have overwhelmed market expectations. In line with knowledge compiled by FactSet, the blended earnings development price for the primary quarter is 33.8%, a lot greater than the earlier forecast of 23.8%. In combination, firms are reporting earnings which can be 23.6% above the estimates, which is far above the five-year common of 6.9%.

This week, 173 S&P 500 firms, or 34% of the index’s constituents will launch their Q1 outcomes. These embrace the majority of the FAANG group of firms (Fb, Apple, Google, Amazon) and different tech giants resemblingMicrosoft and Tesla(chart under).

Wanting additional forward, analysts challenge double-digit earnings development for the remaining three quarters of 2021, with a peak anticipated in Q2 at 54.6%. These above-average development charges are attributed to each a sooner tempo of financial restoration and a low-base impact. Increased earnings are more likely to decrease price-to-earnings (PE) ratios for the three main indices, creating room for them to drive deeper into document territory.

US Q1 Earnings Highlights

Supply: Bloomberg, DailyFX

Asia-Pacific markets look set to kick off the week in a optimistic temper. Futures throughout Japan, Australia and Hong Kong are within the inexperienced following the optimistic Wall Road lead. Australia’s ASX 200 index opened modestly greater, led by supplies (+0.47%), info know-how (+0.31%) and shopper discretionary (+0.14%) sectors, whereas healthcare (-0.01%) trailed behind.

In Hong Kong, inventory connections have registered web southbound inflows for six days in a row, with complete HK$ 29 billion getting into the Hong Kong inventory market from mainland China. This means that danger urge for food has improved not too long ago, doubtlessly paving the way in which for a rebound within the Dangle Seng Index (HSI).

Supply: Bloomberg, DailyFX

Wanting forward, the FOMC and BoJ rate of interest selections lead the financial docket alongside US GDP and Chinese language manufacturing PMI knowledge. In the meantime, oil merchants will eye Wednesday’s API crude stock knowledge for clues in regards to the provide and demand relationship. Discover out extra from theDailyFX calendar.

Wanting again to Friday’s shut, all 9 Dow Jones sectors ended greater, with 83.3% of the index’s constituents closing within the inexperienced. Supplies (+1.94%), financials (+1.34%) and knowledge know-how (+0.83%) have been among the many finest performers, whereas shopper staples (+0.00%) and communication providers (+0.12%) lagged behind.

Dow Jones Sector Efficiency 23-04-2021

Supply: Bloomberg, DailyFX

Dow Jones Index Technical Evaluation

The Dow Jones index broke above the ceiling of the “Ascending Channel” and prolonged greater, underscoring sturdy upward momentum. The index is hitting an instantaneous resistance degree at 33,954 – the 127.2% Fibonacci extension. A profitable try would seemingly intensify near-term shopping for stress and expose the subsequent resistance degree of 35,342 (the 161.8% Fibonacci extension).

The MACD indicator has fashioned a bearish crossover, suggesting that near-term upward momentum might be fading.

Dow Jones Index – Each day Chart

Dangle Seng Index Technical Evaluation:

The Dangle Seng Index (HSI) stays in a consolidative mode inside a slim vary between 28,334 and 29,290, which function fast help and resistance ranges respectively. The Bollinger Band width is narrowing, pointing to a scarcity of path. The RSI oscillator is trending greater above the impartial midpoint, suggesting that bullish momentum is constructing.

Dangle Seng Index – Each day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index seems to be hitting a key resistance degree at 7,070 – the 100% Fibonacci extension. A agency breakout above 7,070 would seemingly open the door for additional upside potential with an eye fixed on 7,260 – the 127.2% Fibonacci extension. Upward momentum seems to be gaining as recommended by rising MACD trendlines.

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