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Dow Jones Advances After Powell Testimony, Hang Seng May Follow Higher


DOW JONES, HANG SENG INDEX, ASX 200 INDEX OUTLOOK:

  • Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.51%, +0.92% and +1.41% respectively
  • Powell’s testimony delivered little shock, assuaging considerations about charge hikes and coverage tightening
  • The DXY US Greenback index fell to 8-week low; APAC markets are positioned to comply with greater

Dow Jones, Powell Testimony, US Earnings, US Greenback, Asia-Pacific at Open:

The Dow Jones Industrial Common snapped a four-day shedding streak and closed greater, lifted by cyclically-oriented sectors akin to power, supplies and industrials. Federal Reserve Chair Jerome Powell reassured market individuals that the central financial institution will convey down inflation whereas maintaining the financial growth in form. Powell additionally mentioned that the Fed will in all probability begin to shrink its stability sheet this yr. Immediately’s launch of US inflation information may also be carefully eyed by merchants for clues about rising value ranges and its ramifications for policymakers.

The DXY US Greenback index fell 0.36% to an eight-week low of 95.60. A weakening US Greenback might alleviate stress on equities, treasured metals and Rising Market currencies.

US earnings season will kick off this week with large banks akin to JPMorgan, Wells Fargo and Citigroup saying This autumn outcomes. Analysts and firms look like much less optimistic in comparison with latest quarters of their outlook. Extra S&P 500 firms have issued destructive EPS steerage and fewer have issued constructive earnings steerage for this quarter. But the estimated earnings progress charge for the S&P 500 is 21.7%, in line with Factset. This marks the fourth straight quarter of earnings progress above 20%.

As earnings expectations begin to normalize and base results fade, traders could also be hesitant to chase up inventory market highs and play a defensive sport. The know-how sector, which issued probably the most destructive earnings steerage and is relatively extra weak to rate of interest hikes, could also be extra inclined to technical pullbacks.

DXY US Greenback Index – Each day

Dow Jones Advances After Powell Testimony, Hang Seng May Follow Higher

Chart created with TradingView

Asia-Pacific markets are positioned for a constructive begin to the day. Futures in Japan, Hong Kong, Australia, South Korea, Taiwan, Singapore, India, Thailand and Indonesia are all within the inexperienced. These in mainland China and Malaysia are within the crimson.

Hong Kong’s Dangle Seng Index seems set to open 1.2% greater, led by know-how shares. US-listed ADRs akin to Alibaba (+3.0%), Tencent (+4.4%) and JD.COM (+10.3%) soared in a single day, doubtlessly fueling a rally within the Dangle Seng Tech Index (HSTECH). Hong Kong shares have lagged behind international friends for many of 2021, and traders might eyeing them for deep discount searching.

Wanting forward, China’s inflation charge and new Yuan loans lead the financial docket alongside US inflation readings. US CPI is predicted to hit a four-decade excessive of seven.0% in December, and the core CPI is predicted to return in at 5.4%. Increased-than-expected readings would doubtless spur considerations about Fed tightening and weigh on equities, whereas decrease readings would doubtless have the alternative impression. Discover out extra from the DailyFX calendar.

Wanting again to Tuesday’s shut, 7 out of 9 Dow Jones sectors ended greater, with 63.3% of the index’s constituents closing within the inexperienced. Power (+2.29%), supplies (+1.34%) and industrials (+1.15%) had been among the many finest performers, whereas client discretionary (-0.40%) and client staples (-0.39%) trailed behind.

Dow Jones Sector Efficiency 12-01-2021

Dow Jones Advances After Powell Testimony, Hang Seng May Follow Higher

Supply: Bloomberg, DailyFX

Dow Jones Index Technical Evaluation

The Dow Jones Industrial Common has doubtless shaped a bearish “Butterfly” chart sample and has since entered a technical correction. An instantaneous assist stage could be discovered at 35,760 – the 38.2% Fibonacci retracement, adopted by 35,390 – the 50% Fibonacci retracement. The earlier excessive (level D) serves as a key resistance. The MACD indicator has shaped a bearish crossover, suggesting that near-term momentum could also be weakening.

Dow JonesIndex – Each day Chart

Dow Jones Advances After Powell Testimony, Hang Seng May Follow Higher

Chart created with TradingView

Dangle Seng Index Technical Evaluation:

The Dangle Seng Index (HSI) trended decrease inside a “Falling Wedge” sample, as highlighted within the chart beneath. Costs examined a right away assist stage at 22,800 (200% Fibonacci extension) and rebounded. Holding above this stage might pave the way in which for a check of the psychological stage of 24,000. The MACD indicator is trending greater beneath the impartial midpoint, suggesting that bullish momentum could also be constructing.

Dangle Seng Index – Each day Chart

Dow Jones Advances After Powell Testimony, Hang Seng May Follow Higher

Chart created with TradingView

ASX 200 Index Technical Evaluation:

The ASX 200 index pulled again to a range-bound zone between 7,200 to 7,500 after a ‘false breakout’ final week. The ground and ceiling of the vary could also be seen as fast assist and resistance ranges respectively. The general development stays bullish-biased, because the MACD indicator pierced via the impartial midpoint and moved greater. A significant breach above 7,500 might intensify shopping for stress and expose the subsequent resistance stage of seven,760.

ASX 200 Index – Each day Chart

Dow Jones Advances After Powell Testimony, Hang Seng May Follow Higher

Chart created with TradingView

— Written by Margaret Yang, Strategist for DailyFX.com

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



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