Nasdaq, Dow Jones Might Prolong Slide Amid Simmering US-China Tensions

Nasdaq 100, Dow Jones Industrial Common, US Elections, US-China Tensions – Speaking Factors:

• Simmering US-China tensions might weigh on threat belongings within the absence of impactful financial knowledge.
• Nasdaq 100 poised to maneuver increased after sliding again to key assist.
• Ascending Schiff Pitchfork guiding the Dow Jones Industrial Common increased.

Asia-Pacific Recap

The haven-associated US Greenback and Japanese Yen nudged marginally decrease throughout Asia-Pacific commerce because the Financial institution of Japan confirmed they are going to proceed to “take extra easing measures if mandatory”.

World fairness markets moved increased, led by the Australian ASX 200 index which soared as a lot as 1.22% early within the session earlier than closing simply shy of 6000.

Gold and silver gained as US 10-year Treasury yields dipped simply over 1 foundation level.

Wanting forward, the Euro-area’s second quarter GDP launch headlines the financial docket as focus turns to the European Central Financial institution financial coverage assembly on September 10.

DailyFX Financial Calendar

Simmering US-China Tensions Could Weigh on US equities

Within the absence of significant financial knowledge, latest feedback from President Donald Trump stating that “we’re going to finish our reliance on China” might weigh on US benchmark fairness indices forward of the Federal Reserve’s financial coverage assembly on September 16.

After all, one might argue that escalating anti-China rhetoric is to be anticipated within the run-up to US normal elections in November and given the frequency of Trump’s assaults on Beijing, the market might have grow to be considerably desensitized to trade-related headlines.

Furthermore, the President at the moment lags his democratic challenger by 8% within the nationwide polls, with 50.4% of Individuals preferring Joe Biden over a second Trump time period. Subsequently, it appears comparatively logical to low cost the latest escalation in US-China tensions.

Nonetheless, with the President noticeably narrowing the hole in latest weeks, the proposed “decoupling” of the world’s two largest economies might grow to be a extra doubtless state of affairs and in flip considerably hamper the efficiency of regional threat belongings.

To that finish, trade-related headlines might start to dictate the near-term outlook for benchmark fairness indices, with a marked escalation in tit-for-tat exchanges probably fuelling a interval of serious threat aversion and limiting the potential upside for the tech-heavy Nasdaq 100 index and Dow Jones Industrial Common.

Information Supply – Bloomberg

Nasdaq 100 Each day Chart – Perched Precariously atop Pattern Assist

The Nasdaq 100 index’s three-day retreat from its report excessive (12466.6) seems to be nothing greater than a short-term pullback, as worth bounces away from confluent assist on the August 7 swing-high (11291.8) and 5-month uptrend.

Though the RSI plunged via its uptrend extending from the March extremes it stays constructively positioned above its impartial midpoint, which means that bearish momentum could also be fading.

Moreover, a bullish Hammer candle simply above key assist is indicative of swelling constructive momentum and will encourage would-be consumers if worth clambers again above the 21-day transferring common (11650.5).

A every day shut above the 11700 degree would in all probability open the door for a push to resistance on the 61.8% Fibonacci (12018.5) and will carve a path for worth to retest the yearly excessive (12467).

Conversely, a every day shut under the August 7 swing-high (11291.8) might invalidate bullish potential and ignite a correction again in the direction of the June excessive (10310).

Nasdaq Index every day chart created utilizing TradingView

Dow Jones Each day Chart – Schiff Pitchfork Directing Value Larger

In a similar way to its tech-heavy counterpart, the Dow Jones Industrial Common’s sharp two-day retreat from its post-crisis excessive additionally seems to be nothing greater than a short-term pullback, as confluent assist on the January low (28130.2) and Schiff Pitchfork parallel suppress promoting stress.

With worth monitoring inside an ascending Schiff Pitchfork and each the RSI and MACD indicators travelling in bullish territory, a push again in the direction of the month-to-month excessive (29193.6) seems on the playing cards if assist on the 21-day transferring common continues to information worth increased.

A every day shut above the psychologically pivotal 29000 degree would in all probability carve a path again to check the report excessive set in early February (29595).

Then again, a break again under the 21-DMA might encourage a extra sustained pullback and convey the trend-defining 50-MA into play (27250).

Dow Jones Industrial Common every day chart created utilizing TradingView

— Written by Daniel Moss, Analyst for DailyFX

Comply with me on Twitter @DanielGMoss