Dow Jones, Nasdaq 100, Fed, ASX 200, Nikkei 225, Kospi – Asia Pacific Indices Briefing
- Dow Jones gains, Nasdaq 100 outperforms amid dovish Fedspeak
- Asia-Pacific equities may rise, especially ones skewed towards tech
- Australia’s ASX 200 could be aiming to revisit 2020 peaks near-term
Monday’s Wall Street Trading Session Recap
Equities on Wall Street gained, with the tech-heavy Nasdaq 100 leading the charge, climbing 1.72% on Monday. The S&P 500 and Dow Jones Industrial Average gained 0.99% and 0.54% respectively. This likely reflected demand for growth-oriented equities compared to value ones. This followed fading 2020 Fed rate hike bets as Treasury yields declined during a fairly quiet session deprived of key economic data risk.
Ongoing dovish commentary from the central bank seemed to play a role here. Atlanta Fed President Raphael Bostic noted that right now, he does not see that inflation will be enduring. This is as St. Louis Fed President James Bullard said that they are ‘not quite there’ in terms of being ready to talk about tapering policy. The central bank has been downplaying last month’s elevated CPI report, and markets have been taking notice.
Dow Jones Technical Analysis
From a technical standpoint, Dow Jones futures are eyeing a key zone of resistance between 34352 and 34427 on the 4-hour chart below. Breaking higher could open the door to extending the bounce off rising support from October. That would likely place the focus on the all-time high at 35000. Having said that, negative RSI divergence shows that upside momentum is fading. This may precede a turn lower.
Dow Jones Futures – 4-Hour Chart
Tuesday’s Asia Pacific Trading Session
With that in mind, Tuesday’s Asia-Pacific trading session could see the positive sentiment from Wall Street carry over. This is particularly in focus given a fairly quiet day in terms of data. This may place Australia’s ASX 200 and Japan’s Nikkei 225 on the offensive. Strong gains in tech stocks overnight may offer further upside momentum for South Korea’s KOSPI index and Taiwan’s TAIEX. The latter is more concentrated in the semiconductor industry.
ASX 200 Technical Analysis
On the 4-hour chart, the ASX 200 closed at its highest since May 11th, pushing above the May 18th peak. That is placing the midpoint of the Fibonacci extension into focus at 7101. There was also a bullish crossover between the 20- and 50-period Simple Moving Averages (SMAs). On balance, this could point for a near-term rosy picture. This is also amid what appeared to be a false breakout under rising support from 2020. Further gains would expose the 2020 high.
ASX 200 – 4-Hour Chart
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter