S&P 500 Climbs on Powell’s Dovish Tone, China GDP in Focus

S&P 500, NIKKEI 225, ASX 200 INDEX OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 closed +0.13%, +0.12%, and +0.17% respectively
• Jerome Powell reiterated his dovish stance when chatting with the Home of Monetary Service Committee
• China’s Q2 GDP is predicted at 8.1% YoY, which is able to set the tone for APAC buying and selling

Powell Testimony, China GDP, Earnings, Yields, USD, Asia-Pacific at Open:

Wall Avenue shares climbed after Fed Chair Jerome Powell reiterated his dovish stance in a semiannual financial coverage report back to the Congress. He mentioned that the economic system’s progress remains to be a methods off to reaching the usual of ‘substantial additional progress’, and the labor market specifically remains to be effectively beneath pre-Covid ranges. Subsequently, the central financial institution could proceed its present tempo of asset buy and will probably be affected person in tightening financial stimulus.

The US Greenback fell alongside Treasury yields after his speech, which soothed tapering fears after Tuesday’s core CPI information stoked inflation issues. But, tapering will stay a key market theme within the months to come back. Yesterday, each the RBNZ and BoC introduced a scaling again their pandemic-era asset purchases this month because the financial restoration gathers tempo.

US earnings season kicked off with an upbeat tone, with outcomes from Morgan Stanley, Goldman Sachs, Financial institution of America, Wells Fargo and Citigroup all topping analysts’ estimates. Market reactions have been considerably blended nonetheless, reflecting that merchants have been maybe “shopping for expectations, and promoting information”.

Wanting forward, China’s Q2 GDP determine heads at the moment’s financial docket alongside Australia’s jobs report and US weekly preliminary jobless claims information. Asian buyers will monitor carefully the expansion fee of the world’s second-largest economic system for clues about its restoration. The latest RRR minimize signaled that extra liquidity is required for small and medium enterprises to resist rising uncooked materials costs. Discover out extra from DailyFX financial calendar.

China GDP (YoY) – Forecast

Supply: Bloomberg, DailyFX

Asia-Pacific markets are blended originally of Thursday’s buying and selling session. Futures in Japan, mainland China, Hong Kong, South Korea, Singapore, Malaysia and Thailand are within the crimson, whereas these in Australia, Taiwan and India are within the inexperienced.

Japan’s Nikkei 225 index seems to be set to increase decrease after falling 0.38% on Wednesday. Shares in Tokyo are underneath promoting strain as buyers mull beneficial properties in new coronavirus instances in Japan brought on by the Delta variant of the Covid-19 virus. A stronger Japanese Yen may additionally weigh on shares because it makes the nation’s exports costlier to abroad patrons.

Wanting again to Wednesday’s shut, 5 out of 11 S&P 500 sectors ended greater, with 48.1% of the index’s constituents closing within the inexperienced. Shopper staples (+0.92%), actual property (+0.89%) and utilities (+0.84%) have been among the many finest performers, whereas power (-2.94%) lagged behind.

S&P 500 Sector Efficiency 14-07-2021

Supply: Bloomberg, DailyFX

S&P 500 IndexTechnical Evaluation

The S&P 500 index breach above a key resistance degree at 4,290 and thus opened the door to additional upside potential. The following key resistance degree could be discovered at 4,650 – the 161.8% Fibonacci extension. The general pattern stays bullish-biased as costs proceed to pattern greater inside a “Ascending Channel” fashioned since November. The MACD indicator continued to pattern greater ,underscoring upward momentum.

S&P 500 Index– Day by day Chart

Nikkei 225 Index Technical Evaluation:

The Nikkei 225 index stays in a “Descending Channel” fashioned since February. The ground and ceiling of the channel could also be seen as instant help and resistance ranges respectively. The general pattern stays bearish-biased as advised by the downward-sloped SMA strains. The MACD indicator is oscillating at across the impartial line, suggesting that costs could also be lack of a transparent course.

Nikkei 225 Index – Day by day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index entered a good vary between 7,230-7,370 over the previous few weeks, ready for contemporary catalysts for a breakout. The general bullish pattern stays intact as advised by the upward-sloped SMA strains. The MACD indicator is about to type a bullish crossover, suggesting that upward momentum could also be constructing.

ASX 200 Index – Day by day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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