S&P 500 Hits All-Time Excessive, Lifting Cling Seng and ASX 200 Sentiment

S&P 500, Cling Seng Index, ASX 200 OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.69%, +0.33% and -0.14% respectively
• Tesla’s plan to recall 285ok autos in China weighed on tech sentiment
• APAC markets are positioned to open greater after one other report session on Wall Road

S&P 500, Tesla, Yield Curve, Nonfarm Payrolls, Asia-Pacific Week-Forward:

The S&P 500 index hit an all-time excessive on Friday as President Joe Biden’s infrastructure stimulus plan boosted reflation optimism. The core PCE inflation price got here in at 3.4% YoY in Might, largely according to expectations. The expertise sector pulled again barely nonetheless after Tesla introduced a plan to recall 285ok autos in China attributable to questions of safety related to its driving software program.

The US Treasury yield curve steepened, hinting at a renewed wave of reflation bets as merchants try to cost in greater longer-term inflation charges. The 10-year price surged 2.38% to 1.53%, whereas the 2-year yield solely climbed modestly. The Nasdaq 100/Dow Jones ratio exhibits a damaging correlation with the US 10-2 yr unfold over the previous few months (chart beneath). It is because a steepening Treasury yield curve makes the tech-heavy index much less interesting when longer-end borrowing prices rise quicker than the entrance-end charges.

US 10-2 Yr Yield Unfold vs. Nasdaq 100/Dow Jones Ratio

Chart plotted with TradingView

APAC markets look set to kick off the week on the entrance foot. Futures in mainland China, Hong Kong, Australia, South Korea, Taiwan, Singapore, Malaysia and India are within the inexperienced, whereas these in Japan and Thailand are barely decrease.The return of a two-week lockdown in Sydney attributable to viral resurgence might weigh on Australia’s ASX 200 index, offsetting constructive affect from Wall Road.

Hong Kong’s Cling Seng Index arrived at a key resistance degree at 29,300. Market sentiment was revitalized by the PBoC’s liquidity injection by way of reverse repo operation final week. Merchants might take word that this Thursday is the 100th yr anniversary of the founding of the Communist Social gathering of China (PCP). Due to this fact, sustaining monetary market stability could be the central financial institution’s high precedence. Tencent and Alibaba ADRs rallied 3.02% and 4.63% respectively throughout US session on Friday, buying and selling at 0.89% and a pair of.79% premium respectively in comparison with their HK listings.

For the week forward, NBS manufacturing PMI and Euro space core inflation information dominate the financial docket alongside US ISM manufacturing PMI and nonfarm payrolls releases. The July OPEC+ assembly may also be underneath the highlight for clues in regards to the oil cartel’s manufacturing hike plan. Discover out extra from theDailyFX calendar.

Trying again to Friday’s shut, 10 out of 11 S&P 500 sectors ended greater, with 79.4% of the index’s constituents closing within the inexperienced. Financials (+1.25%), utilities (+1.13%) and client staples (+0.80%) outperformed, whereas data expertise (-0.15%) trailed behind.

S&P 500 Sector Efficiency 25-06-2021

Supply: Bloomberg, DailyFX

S&P 500 Index Technical Evaluation

The S&P 500 index is extending greater to problem a key resistance degree at 4,290 – the 127.2% Fibonacci extension. A profitable breakout would probably intensify near-term shopping for energy and carve a path for costs to aim greater highs. The general bullish development stays intact as steered by the “Ascending Channel”. Bearish MACD divergence hints that upward momentum could also be faltering. A pullback might result in a take a look at of the 20- and 50-day SMA strains for rapid helps.

S&P 500 Index – Every day Chart

Cling Seng Index Technical Evaluation:

The Cling Seng Index is trying to breach the neckline (29,300) of the “Double Backside” sample for a second attempt. A profitable try might open the door for additional upside potential with a watch on 31,180 – the earlier excessive. The MACD indicator is trending greater, suggesting that momentum could also be tilted to the upside.

Cling Seng Index – Every day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index has probably shaped a “Bull Flag” chart sample, which serves as a continuation sample after a interval of sturdy upward motion. Costs are consolidating at across the 161.8% Fibonacci extension degree ready for recent catalysts. The general development stays bullish-biased, as steered by the consecutive greater highs and better lows. The MACD indicator shaped a bearish crossover and trended decrease, suggesting that additional consolidation could also be underway

ASX 200 Index – Every day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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