S&P 500, Hold Seng, ASX 200 Outlook: Extra Wet Days Forward?

S&P 500, HANG SENG, ASX 200, ASIA-PACIFIC MARKET OUTLOOK:

• Wall Road equities tumbled 2% on Friday as profit-taking ramped up, presumably main international equities right into a technical correction
• Danger-linked Australian and New Zealand {Dollars} are declining, reflecting “risk-off” sentiment
• Alphabet, Amazon, Alibaba and Exxon are reporting earnings this week. Nonfarm payrolls knowledge in focus.

China PMI, Market Turmoil, US Earnings, Asia-Pacific Shares Weekly Outlook:

Asia-Pacific equities kicked off the week with a bitter tone as Wall Road equities closed sharply decrease on Friday. The S&P 500, Dow Jones and Nasdaq Composite misplaced -1.93%, -2.03% and -2.00% respectively, with nearly 93% of shares ending decrease. A battle between retail merchants and hedge funds over a number of heavily-shorted US shares appeared to have catalyzed a volatility spike and subsequently a inventory market pullback. However a deeper look might counsel that market valuations had reached an unsustainable stage that the time was ripe for a correction. Virtually something may have been taken as a set off for that.

Within the foreign money market, the risk-linked Australian, New Zealand {Dollars} in addition to the Norwegian Krone are among the many worst performing G10 members, suggesting that ‘risk-off’ sentiment is dominating. Silver costs gapped 6% increased because it was perceived as one of many new targets by Wallstreetbets day merchants who’ve pushed up the value of GameStop and AMC Leisure lately. Silver costs have surged 15% since final Wednesday. Throughout the identical interval, gold costs have solely superior 0.8%, suggesting that silver’s rally may be a stand-along case pushed by speculative exercise and won’t have a big affect on different valuable metals.

Inventory marketsseem to have priced in lofty optimism concerning the Covid-19 vaccine rollout, fiscal stimulus, reflation and one other seemingly upbeat earnings season, whereas mutant viral strains and prolonged lockdown measures across the globe might counsel a slower tempo of development within the months to come back. The December NBS China manufacturing PMI studying got here in at 51.Three on Sunday, decrease than the baseline forecast of 51.6, and marked a second month of slowdown within the tempo of growth. This may be attributed to moderated export demand in addition to Covid-related restrictions that affected manufacturing and operation.

NBS China Manufacturing PMI

Supply: Bloomberg, DailyFX

Australia’s ASX 200 index began decrease and fell as a lot as 1.35% in early buying and selling hours, dragged by power (-2.35%),financials (-1.74%) and knowledge expertise (-1.21%) sectors, whereas defensive-linked healthcare (+0.16%) and shopper staples (-0.08%) barely outperformed. The index appears set to check a direct help stage at 6,530 with bearish momentum.

Merchants are dealing with a busy week forward by way of macro occasions: US Markit Manufacturing PMI, Euro Space This fall GDP and core inflation, China Caixin Service PMI, BoE rate of interest resolution and the US nonfarm payrolls report are in focus. Discover out extra from DailyFX calendar.

Upbeat US This fall earnings might assist to restrict the depth of the inventory markets’ pullback. To this point, 37% of the S&P 500 firms have launched their outcomes, with 82% of them beating analysts’ forecasts. The knowledge expertise, healthcare and financials sectors have outperformed with the very best proportion of constructive earnings surprises, whereas utilities, power and actual property sectors lagged behind, in response to knowledge compiled by Factset.

Within the week forward, round 22% of S&P 500 firms will launch their outcomes, together with Pfizer, Exxon, Alphabet, Amazon, PayPal, eBay and Ford Motor. Learn extra on my earnings outlook report.

Supply: Bloomberg

Supply: Factset

S&P 500 Index Technical Evaluation:

Technically, the S&P 500 index has damaged the “Ascending Channel” shaped since early November and thus might open the door for additional draw back potential. The near-term pattern has doubtless tuned bearish after value broke the 20-Day SMA and 50-Day decisively. Instant help ranges may be discovered at 3,705 (50% Fibonacci extension) after which 3,660 (38.2% Fibonacci extension). The MACD indicator has shaped a bearish crossover and has trended decrease since, reflecting that the bears are in all probability taking management.

S&P 500 Index – Each day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index is testing a direct help stage at 6,530, which is the underside of a range-bound zone that it was buying and selling inside for the previous few months (chart under). Value has damaged the 20- and 50-Day SMA traces decisively, reflecting sturdy promoting stress. Widening Bollinger Band width means that volatility is selecting up, and downward stress may acquire momentum if value breaks the 6,530 help. A right away help stage may be discovered at 6,480 – the 100-Day SMA.

ASX 200 Index – Each day Chart

Hold Seng Index Technical Evaluation:

The Hold Seng Index failed to interrupt a psychological resistance stage at 30,00Zero and has since entered a pointy correction. A “Demise Cross” has doubtless shaped on the 4-hour chart, with 20 SMA piercing under the 50 SMA decisively. Value has entered the decrease Bollinger Band after breaking the center line, signally a deeper pullback. Instant help ranges may be discovered at 28,060 (50% Fibonacci retracement) after which 27,560 (61.8% retracement).

Hold Seng Index – Each day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

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