Will the Rally Keep on?

DOW JONES, HANG SENG, NIKKEI 225, ASIA-PACIFIC MARKET OUTLOOK:

• Dow Jones futures edged decrease after registering a small loss on Monday
• Reflation commerce seems to have taken a pause as markets anticipate new fiscal stimulus to come back in mid-March
• The Grasp Seng Index surged 2.4% and scrapped the 30,000 mark, reaching a contemporary 20-month excessive

Fiscal stimulus, Earnings, Southbound move to HK, Asia-Pacific Shares Outlook:

US markets had been combined in a single day with healthcare (+0.76%), client staples (+0.74%) and data expertise (+0.55%) sectors outperforming. The Dow Jones Industrial Common underperformed the S&P 500 and Nasdaq 100 indices, reflecting a cooling urge for food for reflation trades as traders returned to tech and staples looking for for certainty. Senate Majority chief Chuck Schumer stated that he’s aiming to move the brand new fiscal stimulus plan by mid-March, which can have dissatisfied traders who had anticipated a shorter timeline.

US earnings continued to fare nicely, with 71 out of 86, or 82% S&P 500 firms delivering optimistic surprises to this point this season. Trying forward, Johnson & Johnson, UBS, 3M, Hyndai, GE, American Categorical, Microsoft, AMD are among the many key firms to disclose outcomes in the present day (desk on the finish). Learn extra on my earnings outlook report.

Dow Jones Sector Efficiency 26-01-2021

Supply: Bloomberg, DailyFX

The DXY US Greenback index rebounded to 90.30 to check the 50-Day Easy Shifting Common (SMA) line, which can function a direct resistance stage. The US 10-year Treasury yield fell to 1.03% from 1.08% a day in the past, reflecting rising demand for security and lowered reflation expectations. This may occasionally set a bitter tone for Asia-Pacific equities after a powerful buying and selling session on Monday.

The Grasp Seng Index (HSI) surged 2.4% on Monday and closed above the 30,000 mark for the primary time since Might 2019. The rally was led by expertise firms together with Tencent (+10.9%), Meituan (+5.2%) and Alibaba (+2.95%) as southbound influx from mainland traders ramped up.

Grasp Seng High 10 Shares Efficiency 26-01-2021

Supply: Bloomberg, DailyFX

The HSI registered a whopping 13.8% year-to-date achieve, propelled by substantial quantity of southbound influx through the Hong Kong-Shanghai and Hong Kong-Shenzhen inventory connections. Some HK$ 19.25 billion of web southbound influx had been noticed on Monday, greater than doubled from HK$ 9.36 billion seen on final Friday. Complete southbound flows contributed to round 30% HKEX’s every day turnover not too long ago.

Grasp Seng Index vs. Every day Southbound Web Circulation – 12 Months

Supply: Bloomberg, DailyFX

Dow Jones Index Technical Evaluation:

Technically, the Dow Jones index prolonged its upward trajectory inside an “Ascending Channel” as highlighted within the chart under. The bull development is well-supported by its 20-Day Easy Shifting Common (SMA), which serves as a direct help stage. A breaking down of the 20-Day SMA might sign a short-term development reversal. Help and resistance ranges will be discovered at 30,430 (50-Day SMA) and 31,460 (higher Bollinger Band) respectively.

Dow Jones Index – Every day Chart

Grasp Seng Index Technical Evaluation:

The Grasp Seng index is using a powerful development with an try to breach the 127.2% Fibonacci extension stage at 29,870. Breaching this stage might open the door for additional upside potential with a watch on 30,930 – the 161.8% Fibonacci extension. The MACD indicator has proven signal of weak point nonetheless, which can recommend that the index is briefly overbought and due for a correction.

Grasp Seng Index – Every day Chart

Nikkei 225 Index Technical Evaluation:

The Nikkei 225 index hit the 100% Fibonacci extension stage of 28,770 and has retraced barely since. The general development stays bullish as highlighted within the two “Ascending Channels” under. A bearish MACD crossover displays faltering bullish momentum and will trace at short-term stress. Rapid help and resistance ranges will be discovered at 27,980 (76.4% Fibonacci extension) and 28,770 (100% Fibonacci extension) respectively.

Nikkei 225 Index – Every day Chart

S&P 500 Earnings Calendar 22-26th January 2021

— Written by Margaret Yang, Strategist for DailyFX.com

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