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S&P 500 Retreats Amid Rate Hike Fears, Hang Seng and ASX 200 May Follow Lower


S&P 500, NIKKEI 225, ASX 200 WEEKLY OUTLOOK:

  • Dow Jones, S&P 500 and Nasdaq 100 indexes closed -0.01%, -0.41% and -0.96% respectively
  • US nonfarm payrolls improve got here in under expectations, however unemployment charge and wage development confirmed stable proof of a decent labor market situation
  • Asia-Pacific futures are pointing to a bitter begin of the week. Japanese inventory markets are closed

Jobs report, Fee hikes, Treasury Yields – Asia-Pacific Week-Forward:

Wall Road shares ended the week on a bitter notice, with the Nasdaq, the S&P 500 and the Dow Jones indices falling -4.53%, -1.87% and -0.29% respectively final week. Know-how shares have been hit the toughest as comparatively threatier development shares are extra delicate to rate of interest hike expectations in comparison with different sectors.

Some market members should still view this pullback as one other wholesome correction and doubtlessly a chance to purchase extra because the financial system has proven good indicators of enchancment. Friday’s US jobs report confirmed that the unemployment charge has fallen to three.9% – which is getting near pre-pandemic stages. Wagesgrew 0.6% on the month in December, accelerating from November’s studying of 0.4%. Nonfarm payrolls got here in at 199k, alongside upward revisions within the earlier two months.

This means that the labor market is going through pent up demand and will feed into inflationary strain, spurring the Fed to boost rate of interest as quickly as March. In the meantime, sturdy shopper spending couldassist company earnings and this optimistic suggestions loop could assist the financial system to face up to the gradual rates of interest liftoff this yr. In addition to, this week’s US core inflation information can even be in the highlight.

S&P 500 Retreats Amid Rate Hike Fears, Hang Seng and ASX 200 May Follow Lower

Supply: Bloomberg, DailyFX

The US10-year Treasury yield climbed to the best stage since January 2020, as expectations for Fed charge hikes lifted the yield curve. The speed on 10-year US Treasuries is a crucial benchmark and is referenced by many different bonds and property. Subsequently, larger yields could exert downward strain on extremely leveraged corporates, rate-sensitive commodities and rising market property.

US 10-Yr Treasury Yield

S&P 500 Retreats Amid Rate Hike Fears, Hang Seng and ASX 200 May Follow Lower

Chart created with TradingView

APAC markets look set to kick off the week on the again foot. Futures have been decrease within the US, Australia, South Korea, Taiwan, Singapore and Thailand. These in mainland China, Hong Kong, Malaysia, India and Indonesia are in the inexperienced nevertheless.

The fast unfold of the Omicron variant may additionally trigger some considerations about broader reopening amongst traders. The whole variety of Covid-19 circumstances around the globe surpassed 300 million on Friday. The emergence of extremely contagious viral variants similar to Delta and Omicron signifies that the battle in opposition to the pandemic could also be removed from over.

For the week forward, the US core inflation charge and retail gross sales information dominate the financial docket alongside the German fullyr GDP report. Discover out extra from the DailyFX calendar.

Trying again to Friday’s shut, 4 out of 11 S&P 500 sectors ended larger, with 47.1% of the index’s constituents closing within the inexperienced. Vitality (+1.45%), financials (+1.15%) and utilities (+0.75%) have been among the many greatest performers, whereas shopper discretionary (-1.65%) and knowledge know-how (-1.01%) trailed behind.

S&P 500 Sector Efficiency 07-01-2022

S&P 500 Retreats Amid Rate Hike Fears, Hang Seng and ASX 200 May Follow Lower

Supply: Bloomberg, DailyFX

S&P 500 Index Technical Evaluation

The S&P 500 index pull backed from all-time highs, which can be one other wholesome correction alongside its upward trajectory. The general bullish pattern stays intact, as steered by an “Ascending Channel” formation. The subsequent resistance stage could be discovered at 4,882 – the 161.8% Fibonacci extension. The MACD indicator shaped a decrease excessive nevertheless, suggesting that near-term momentum could also be weakening.

S&P 500 Index – Day by day Chart

S&P 500 Retreats Amid Rate Hike Fears, Hang Seng and ASX 200 May Follow Lower

Chart created with TradingView

Grasp Seng Index Technical Evaluation:

The Grasp Seng Index (HSI) trended decrease inside a “Falling Wedge” sample, as highlighted within the chart under. Costs are testing an instantaneous assist stage at 22,800 – the 200% Fibonacci extension. Holding above this stage could pave the way in which for a technical rebound. The MACD indicator is trending larger under the impartial midpoint, suggesting that bullish momentum could also be constructing.

Grasp Seng Index – Day by day Chart

S&P 500 Retreats Amid Rate Hike Fears, Hang Seng and ASX 200 May Follow Lower

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 speedy assist and resistance ranges respectively. The general pattern stays bullish-biased, because the MACD indicator pierced by way of the impartial midpoint and moved larger. A significant breach above 7,500 could intensify shopping for strain and expose the subsequent resistance stage of seven,760.

ASX 200 Index – Day by day Chart

S&P 500 Retreats Amid Rate Hike Fears, Hang Seng and ASX 200 May Follow Lower

Chart created with TradingView

— Written by Margaret Yang, Strategist for DailyFX.com

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



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