Nasdaq Rebound May Lead Hang Seng, ASX 200 Higher amid Tech Rally

NASDAQ 100, HANG SENG, ASX 200 INDEX OUTLOOK:

Dow Jones, S&P 500 and Nasdaq 100 surged +0.58%, +1.04% and +2.36% respectively
A lower-than-expected initial jobless claims figure showed strength in the US job market
Stimulus-driven rally set a positive tone for Asia-Pacific markets at open. Bitcoin close to all-time highs

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Tech Rally, Jobless Claims, Yields, USD, Asia-Pacific at Open:

The S&P 500 and Dow Jones rallied to their record highs on Thursday as technology shares continued to recover from the recent rout. The Nasdaq 100 index jumped 2.36%, led by PayPal (+4.86%), tesla (+4.72%) and NVIDIA (+4.21%). A better-than-expected jobless claims report and the passing of the US$ 1.9 trillion federal spending bill boosted sentiment and inflation fears eased following smooth Treasury note auctions these days. The recent pullback in the technology sector may prove to be another healthy correction amid a medium-term bull trend, as an improved fundamental outlook and fresh stimulus are likely to underpin corporate earnings in the quarters to come.

The US Dollar index (DXY) fell and the 10-year Treasury yield stabilized after a smooth 30-year note auction, easing concerns about a continuous rise in longer-term borrowing costs. A weaker dollar may encourage capital to return to emerging market assets, commodities and cryptocurrencies. Bitcoin prices surged to above 58k with an attempt to challenge the all-time highs.

Source: Bloomberg, DailyFX

Asia-Pacific marketslook set to gain following a strong US lead. Futures across Japan, China, Australia, Hong Kong, South Korea, Taiwan and Singapore are pointing to open modestly higher.

Australia’s ASX 200 index opened up nearly 1 percent, led by information technology (+2.56%), materials (+1.47%) and energy (+1.42%) sectors. 10 out of 11 ASX 200 sectors were trading in the green. Japan’s Nikkei 225 may be under pressure today after Bank of Japan was reported to scrap its 6-trillion Yen ETF purchase goal – a potential sign of tapering as the economy is poised for a robust recovery. Hong Kong’s Hang Seng Index may extend Thursday’s rally as southbound capital registered net imflows for the first time in four days, showing a pickup in risk appetite from mainland funds.

On the macro front, data continued to support a brighter recovery outlook and may offer stock markets further strength. The latest US weekly jobless claims figure came in at 712k, better than the baseline forecast of 725k. It also marked a continuous decline from January’s peak, reflecting an improving picture of labor market sentiment with the rollout of vaccines paving the way for a gradual economic reopening.

Looking ahead, German inflation data and UK GDP headline the economic docket alongside the University of Michigan consumer sentiment data. Find out more from theDailyFX calendar.

Source: Bloomberg, DailyFX

Looking back to Thursday’s close, 8 out of 11 S&P 500 sectors ended higher, with 59.8% of the index’s constituents closing in the green. Information technology (+2.12%), communication services (+1.77%) and consumer discretionary (+1.56%) were among the best performers, whereas financials (-0.28%) and utilities (-0.26%) trialed behind.

S&P 500 Sector Performance 11-03-2021

Source: Bloomberg, DailyFX

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Nasdaq 100 Index Technical Analysis

The tech-heavy Nasdaq 100 looks set to challenge a key resistance level of 13,150, where the trend-defining 50-day Simple Moving Average (SMA) line and the 20-day SMA intercept. Breaking it may intensify near-term buying pressure and open the door for further upside potential towards 13,300.

Nasdaq 100 Index – Daily Chart

Chart by TradingView

Hang Seng Index Technical Analysis:

The Hang Seng Index hit a strong resistance level at 31,080 (76.4% Fibonacci retracement level) in mid-February and has since entered a consolidative period. The index attempted to breach the ceiling of the “Descending Channel” as shown in the chart below, and a successful attempt may signal a potential near-term trend reversal. Further confirmation requires the index to break a key resistance level of 29,500, where the 20- and 50-day SMA lines overlap. A daily close above 29,500 may intensify buying pressure and carve a path for price to challenge the 50% Fibonacci extension level at 29,990. The MACD indicator is about to form a bullish crossover, suggesting that near-term momentum has turned upwards.

Hang Seng Index – Daily Chart

ASX 200 Index Technical Analysis:

The ASX 200 index remains in the “Ascending Channel” formed since mid-November. A key support level can be found at 6,700, where the floor of the channel and the 50-Day Simple Moving Average (SMA) line intercept. Breaking this level may intensify near-term selling pressure and open the floor for further losses with an eye on 6,600 for support. The MACD indicator is trending lower beneath the neutral midpoint, suggesting that near-term momentum remains weak.

ASX 200 Index – Daily Chart