DOW JONES, HANG SENG, ASX 200 INDEX OUTLOOK:
- Treasury Secretary nominee Janet Yellen backed Biden’s stimulus plan, sending stocks higher.
- US earnings continued to be upbeat; Netflix smashed new subscriber growth forecasts.
- Asia-Pacific markets lookset to advance further after Tuesday’s rally.
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Dow Jones, Yellen, US earnings, Asia-Pacific at Open:
US equity indices finished broadly higher on Tuesday after Treasury Secretary nominee Janet Yellen showed her support for Biden’s US$ 1.9 trillion fiscal stimulus plan and addressed a market-driven dollar exchange approach in her confirmatioilyauat25n hearing on Tuesday. She also highlighted the need for higher unemployment compensation while opposing tax hikes to help families to weather the pandemic. Yellen’s comments revitalized reflation hopes and lifted crude oil prices, which led the energy sector (+2.63%) to outperform.
US corporate earnings have fared well, with more than 85% of S&P 500 companies beating market estimations so far this season. Netflix’s share price surged over 12% in afterhours trade as the company said it is close to being free cash flow positive and is considering share buybacks to reward investors. Netflix registered strong global paid net subscriber growth of 8.5 million, compared to a baseline forecast of 6.47 million. While its Q4 EPS fell short of expectations, stronger user growth and a slight beat in revenue appear to have more than offset that miss.
Sector-wise, 6 out of 9 Dow Jones sectors advanced on Tuesday, with 56.7% of the index’s constituents closing in the green. Energy (+2.63%), industrials (+1.32%) and information technology (+0.91%) were among the best performers, whereas consumer staples (-0.90%) and consumer discretionary (-0.75%) trailed behind. Looking ahead, earnings from Morgan Stanley, Procter & Gamble and United Airlines will be closely eyed today.
Asia-Pacific markets look set to follow a strong US lead and trade higher, extending Tuesday’s rally. Australia’s ASX 200 Index climbed 0.62% at the open, led by information technology (+2.95%), industrials (+1.62%) and energy (+1.08%) sectors.
Hong Kong’s Hang Seng Index (HSI) jumped 2.7% to a 20-month high yesterday, propelled by significant southbound inflow via the stock connections with mainland China. Investors there showed strong appetite for Hong Kong stocks recently, especially after the release of upbeat Chinese Q4 GDP and December’s industrial production figures. Meituan (+4.9%), AIA (+4.41%) and China Life Insurance (+1.70%) are among the best performing stocks in the HSI.
Hang Seng Index Top 10 Stocks Performance 19-01-2021
Source: Bloomberg, DailyFX
Dow Jones Index Technical Analysis:
Technically, the Dow Jones index looks set to continue its upward trajectory within the “Ascending Channel” as highlighted in the chart below. The bull trend remains intact and is well-supported by its 20-Day Simple Moving Average (SMA) line. Immediate support and resistance levels can be found at 30,760 (20-Day SMA) and 31,410 (upper Bollinger Band) respectively.
Dow Jones Index – Daily Chart
Hang Seng Index Technical Analysis:
The Hang Seng index is riding a strong uptrend and it has breached the 100% Fibonacci extension level at 29,038 decisively. The index pulled back after touching the 127.2% Fibonacci extension level at 29,870, which is an immediate resistance. Price continued to stretch above the upper Bollinger Band, reflecting strong bullish momentum. The RSI indicator suggests that price has been temporarily overbought and thus may be susceptible to a technical pullback.
Hang Seng Index – Daily Chart
ASX 200 Index Technical Analysis:
The ASX 200 index is range-bound between 6,575 to 6,770 since late November, as highlighted in the chart below. Price is attempting to breach the upper bound of 6,770, and a successful attempt may open the door for further upside potential with an eye on 6,811 – the 200% Fibonacci extension level.
ASX 200 Index – Daily Chart
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— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter