NASDAQ 100,HANG SENG INDEX, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 closed -0.49%, -0.24%, and +0.34% respectively
- US equities erased deep losses after Ukraine and Russia held talks, paving the way for a ceasefire agreement
- Asia-Pacific markets look set to open mixed as investors mulled heightened geopolitical uncertainties
Nasdaq 100, Hang Seng Index, Inflation, Asia-Pacific at the Open:
US markets had a volatile session on Monday, with the Nasdaq 100 index finishing mildly higher, whereas the S&P 500 and Dow Jones ending modestly lower. Investors attempted to strike a balance between heightened geopolitical risks and a lower probability of a 50bps rate hike by the Fed at the March meeting as the Ukraine crisis escalated. The tech-heavy benchmark rebounded for a third day, suggesting that some buyers have returned for bargain hunting.
Russia and Ukraine wrapped up the first round of talks on Monday at the border with Belarus. Both sides agreed that more negotiations will be needed to resolve the disputes, paving the way for a ceasefire agreement if each side gets what they want. Meanwhile, Russia’s central bank more than doubled its key interest rate on Monday to defend a sliding ruble after heavy economic sanctions were imposed on the country by Western powers.
Still, market participants are assessing the economic impact brought about by the Russia’s invasion of Ukraine and the follow-through economic sanctions. Prices of crude oil, natural gas and grains have surged over recent weeks, adding inflationary pressures around the globe. The closure of railways and ports in Ukraine further complicates the supply chain issues in Eastern Europe.
Overall sentiment remains fragile though, as investors remain highly vigilant about the Ukraine situation amid a Russian invasion. Heightened geopolitical risks kept safe havens such as gold and Treasuries afloat. Crude oil prices pulled back from their seven-year highs as the US and its allies are considering releasing about 60 million barrels of emergency stockpiles to ease supply constraints.
Gold – Daily
Chart created with TradingView
Asia-Pacific markets look set to open modestly higher amid cautious sentiment. Futures in Japan, Australia, South Korea, Singapore, Malaysia, India and Indonesia are in the green, whereas those in mainland China, Hong Kong, Taiwan and Thailand are in the red.
Looking ahead, the China NBS manufacturing PMI dominates the economic docket alongside the RBA interest rate decision. The central bank is widely expected to keep the policy interest rate unchanged. Australia’s wage growth rate came in at 2.3% in 4Q21, below the 3% threshold which may trigger a rate hike. However, the recent rally in commodity prices may translate into higher inflation and may spur a faster pace of rate hikes around the globe. Find out more from theDailyFX economic calendar.
Looking back to Monday close, 4 out of 11 S&P 500 sectors ended higher, with 27.5% of the index’s constituents closing in the green. Energy (2.57%), industrials (+0.73%) and consumer discretionary (+0.60%) were among the best performers, whereas real estate (-1.77%) and financials (-1.45%) trailed behind.
S&P 500 Sector Performance 25-08-2021
Source: Bloomberg, DailyFX
Nasdaq 100 IndexTechnical Analysis
The Nasdaq 100 index is trending lower within a “Descending Channel” as highlighted on the chart below. Prices formed consecutive lower highs and lows over the past few weeks, underscoring a downward trajectory. A successful breach above the ceiling of the channel may signal a bullish trend reversal. An immediate support level can be found at 13,110 – the 200% Fibonacci extension. The MACD indicator is about to form a bullish crossover, suggesting that buying pressure may be building.
Nasdaq 100 Index– Daily Chart
Chart created with TradingView
Hang Seng Index Technical Analysis:
The Hang Seng Index (HSI) breached below an “Ascending Channel” as highlighted on the chart below, suggesting that near-term trend has turned bearish. Prices are testing an immediate support level of 22,800 – the previous low seen in the end of December and early January. Holding above this level may pave the way for a technical rebound. The MACD indicator formed a bearish crossover and trended lower, underscoring bearish momentum.
Hang Seng Index – Daily Chart
Chart created with TradingView
ASX 200 Index Technical Analysis:
The ASX 200 index formed a “Double Top” chart pattern and has since entered a technical correction. An immediate support level can be found at 6,960 – the 23.6% Fibonacci retracement. Breaching below this level may intensify near-term selling pressure and expose the next support level of 6,758. A key resistance level can be found at 9,290, the previous high.
ASX 200 Index – Daily Chart
Chart created with TradingView
— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter
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