S&P 500, NIKKEI 225, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 closed +0.55%, +1.06%, and +1.94% respectively
- Tech stocks soared as jobless data beat expectations, commodity prices fell
- The Nikkei 225 and ASX 200 indexes look set to open higher, setting a positive tone for APAC
Stocks Rebound, Jobless Claims, Commodity, Crypto, Asia-Pacific at Open:
US stocks rebounded strongly on Thursday as markets shrugged off inflation concerns amid favorable jobs data. The tech-centric Nasdaq 100 index soared 1.94%, reversing its downward trajectory from a technical perspective. US weekly jobless data came in better than expected, with 444k unemployment claims filed for the week ending May 14th, compared to a 450k forecast (chart below). The declining trend underscored strength in the labor market as economic growth gathered pace.
Better jobs data, alongside weaker-than-expected demand for an auction of 10-year inflation-protected bond, revitalized risk appetite. The latter suggests that demand for inflation-hedge assets has cooled somewhat, strengthening the Federal Reserve’s view that surge in price levels might be transitory.
Meanwhile, commodity prices retreated further, alleviating concerns about inflationary pressure. Prices of copper, iron ore, nickel, crude oil and natural gas declined for a third day from their recent highs, dragging the performance of energy and material sectors. The DXY US Dollar index fell nearly half a percent overnight, sending gold to a fresh four-month high of $ 1,877.
Crude oil prices slide for a third day as the market attempted to price in an US-Iran nuclear deal narrative, which may lead to higher outputs from the Middle Eastern country. This may weigh on the energy, offshore marine and oil & gas sectors across the Asia-Pacific markets.
Weekly US Jobless Claims
Source: Bloomberg, DailyFX
Asia-Pacific equities are positioned to open higher following a positive lead from Wall Street. Futures in Japan, mainland China, Australia, Hong Kong, Taiwan, Singapore and India are in the green. Investors are eyeing a string of Markit manufacturing PMI figures from the UK, Eurozone and the US for clues about the strength of economic recovery. Canadian retail sales and US existing home sales will also be watched. Find out more from theDailyFX calendar.
Japan’s Nikkei 225 index may trade higher today after registering a small gain on Thursday. Stronger-than-expected exports data and machinery orders may underpin investor confidence, although lingering impact of the pandemic remain a top concern.
Australia’s ASX 200 index opened 0.25% higher on Friday, led by information technology (+2.42%) and healthcare (+1.28%) sectors. Pullback in base metal and raw material prices may have cooled enthusiasm in the commodity-linked index lately. A weaker-than-expected Australian employment report in April hinted that the RBA will likely maintain its accommodative policy stance for a longer period of time.
Looking back to Thursday’s close, 10 out of 11 S&P 500 sectors ended higher, with 69.3% of the index’s constituents closing in the green. Information technology (+1.87%) and communication services (+1.67%) were among the best performers, whereas energy (-0.12%) trailed behind.
S&P 500 Sector Performance 20-05-2021
Source: Bloomberg, DailyFX
Nasdaq 100 Index Technical Analysis
The Nasdaq 100 index has likely formed a minor “Double Bottom” pattern that is inherently bullish in nature. The pattern suggests that the index has found a near-term support at around 13,000 and may be positioned for a rebound. An immediate support level can be found at 13,430 (the 161.8% extension), while a key resistance can be seen at 14,000 (200% Fibonacci extension). The MACD indicator is about to form a bullish crossover, suggesting that downward momentum may be fading.
Nasdaq 100 Index – Daily Chart
Nikkei 225 Index Technical Analysis:
The Nikkei 225 index is challenging a key resistance level at 28,357 (the 100% Fibonacci extension). A successful attempt may opened the door for returning to the range-bound zone it traded within over the last three months. the 20- and 50-day SMA lines are about to breach below the 100-day line, potentially forming a “Death Cross”. It suggests that the medium-term trend has likely turned bearish. The MACD indicator is trending lower beneath the neutral midpoint, suggesting that further consolidation is likely.
Nikkei 225 Index – Daily Chart
Chart by TradingView
ASX 200 Index Technical Analysis:
The ASX 200 index breached below a “Rising Wedge” chart pattern, which is inherently bearish in nature. This may point to further downside potential with an eye on 6,837 (the 50-day SMA) for support. 7,126 (261.8% Fibonacci extension) remains a key resistance. The MACD indicator formed a bearish crossover and trended lower, suggesting that selling pressure is prevailing.
ASX 200 Index – Daily Chart
— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter