Shares Hit Report Excessive as VIX Falls

S&P 500, NIKKEI 225 OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.04%, +0.19% and +0.27% respectively
• The VIX volatility index dropped to a pandemic low, underpinning market energy
• Australian, mainland China and Hong Kong bourses are shut for holidays on Monday, so buying and selling throughout APAC could also be gentle

VIX, FOMC, Yields, Bitcoin, Asia-Pacific Week-Forward:

Wall Avenue equities closed modestly larger on Friday as buyers shrugged off higher-than-expected US inflation information and shifted their focus to this week’s FOMC assembly. The S&P 500 index closed at all-time highs, whereas the Nasdaq 100 index ended a hair beneath its earlier peak. The VIX volatility index slide to 15.66 – the bottom stage seen since February 2020. This implies that market sentiment stays optimistic however could also be weak to threat occasions.

The benchmark 10-year Treasury yield traded close to a three-month low of 1.46%, calming fears about tapering Fed stimulus any time quickly. Market contributors count on central financial institution officers to stay dedicated to free financial coverage even when they begin to talk about the tempo of month-to-month bond purchases this week.

Bitcoin surged greater than 9% over the previous 24 hours after Elon Musk stated that Tesla will resume accepting the digital token for transactions if “there’s affirmation of affordable (~50%) clear vitality utilization by miners with optimistic future pattern”. Costs have returned to the 38.8k space, difficult an instantaneous chart resistance stage of 39.3k.

VIX Volatility Index

Supply: TradingView

APAC markets look set to kick off the week in a combined tone. Futures in Japan, Singapore and Thailand are buying and selling larger, whereas these in Taiwan, South Korea, Malaysia and India are within the crimson. Australian, mainland China and Hong Kong bourses are shut for public holidays, so buying and selling quantity is perhaps skinny as we speak attributable to fewer market contributors. The financial calendar is comparatively quiet too.

For the week forward, US retail gross sales and the FOMC assembly dominate the financial docket alongside Australian unemployment figures. Discover out extra from theDailyFX calendar.

Trying again to Friday’s shut, eight out of 11 S&P 500 sectors ended larger, with 69.5% of the index’s constituents closing within the inexperienced. Financials (+0.61%) and knowledge know-how (+0.56%) outperformed, whereas healthcare (-0.73%) and actual property (-0.59%) trailed behind.

S&P 500 Sector Efficiency 11-06-2021

Supply: Bloomberg, DailyFX

S&P 500 Index Technical Evaluation

The Dow Jones index is trending larger inside an “Ascending Channel” fashioned since early November, the ceiling and the ground of which function key help and resistance ranges respectively. Costs are about to problem the 127.2% Fibonacci extension stage at 4,250. A profitable breach could open the door for additional upside potential. Bearish MACD divergence means that upward momentum could also be fading nonetheless.

S&P 500 Index – Each day Chart

Nikkei 225 Index Technical Evaluation:

The Nikkei 225 index is making an attempt to breach the ceiling of the “Descending Channel” fashioned since early March. A profitable attempt could result in a bullish pattern reversal and thus open the door for additional beneficial properties with a watch on 31,200. The ceiling coincides with the 100-day SMA line, and thus could function a robust resistance. The MACD indicator is flattening, suggesting that upward momentum could also be faltering.

Nikkei 225 Index – Each day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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